[obblekk]

This is incredibly well written.

The oil example is very compelling for import substitution. And the covid example is interesting in showing the savings rate only went up as an offset of gov spending.

I'd love to see a follow up on (a) is it important for the US to increase domestic savings and (b) what are the best policies to do so, and why are they the best?

I imagine blanket tariffs might actually increase the savings rate because they increase the cost of importing all goods when the domestic alternatives are either inferior or more expensive. But I'm curious if they are the best way to achieve the savings goal.

[tastyfreeze]

The only policy that will increase savings rate is a stable or depreciating currency. People are incentivized to use an inflationary currency so they can maintain value.

[analog31]

But they can spend it on stocks, with the hope of maintaining or increasing value. Thats savings, right?

[JackYoustra]

(a) There's an argument that people should save more for retirement, but I haven't heard anything more than that about why domestic savings as a whole has to increase. If anything, this is quite a good place to naturally run a deficit! Good rule of law and investment opportunities, as well as future earnings from migrants.

(b) Targeting the fiscal deficit usually works well, especially because it's particularly yawning right now. Forced savings (sing-style CPF) work ok too though, although only Singaporeans wouldn't consider that a tax.

[_t9ow]

> only Singaporeans wouldn't consider that a tax

Both forced savings and taxes are legally mandated by the government, but that does not mean that forced savings are taxes. Implementation details matter.

Your money in your own CPF account accumulates interest (at decent/attractive interest rates that generally exceed inflation rates), and is then paid out tax-free to you after retirement.

Additionally CPF funds are managed separately from the government's consolidated revenue. They are administered by the CPF Board and are not used for government expenses in its yearly budget.