THERE IS NO EXCESS OF GLOBAL SAVINGS
3 December 2020 | by Peter Warburton
According to Gavyn Davies, chairman of Fulcrum Asset Management and distinguished Keynesian commentator, writing in the FT: “The forces of secular stagnation have created a further excess of global savings over investment, reducing equilibrium real interest rates and inflation.” Leaving to one side the contentious references to secular stagnation and a pre-existing global savings glut, this assertion cannot go unchallenged: while household saving soared in the second quarter, this has been more than offset by public sector dis-saving. National saving rates have tumbled in 2020, as they did in 2009. There is no excess of global savings.