This is why Conservatives don't excel at economics
"How To Abuse Accounting Identities," by Tom Nugent of The National Review:What the senators and media don't get is the basic equation that defines the role of government deficits in the economy: The federal government deficit = non-government savings (of net financial assets). That's fact, not theory, a.k.a. an "accounting identity." Non-government savings include that of both residents of the U.S. and foreigners. If the federal budget deficit of $450 billion about equals the current account deficit, it means that all the net financial assets added by the deficit are being saved by foreigners, who desire to hold all those dollar-denominated U.S. financial assets and are willing to net export to us in order to get them.
This data indicates is that the federal deficit is too small for the U.S. domestic sector to save anything! Domestic savings are low because the budget deficit is too low. Low and unobtainable savings means low demand, excess capacity, and low levels of employment. In other words, to get adequate demand from a healthy economy, a much larger federal budget deficit is needed. Unfortunately neither political party sees the light on this one, and both proclaim a sincerity to balance the budget -- which would totally choke off what growth we do have, as it would actually drain domestic income and savings and further reduce demand.
Er, no. Which leads me to wonder what kind of fools have entrusted their money to PlanMember Advisors, Inc. and/or Victoria Capital Management. If my name were, say, "Ramesh Ponnuru" I would be very embarrassed to be appearing in the same publication as this kind of thing.
Even an economics tyro like me can see this is nonsense.
Thomas E. Nugent is executive vice president and chief investment officer of PlanMember Advisors, Inc. and chief investment officer for Victoria Capital Management, Inc.
No joke, if this guy was involved in managing any of my investments I'd suddenly be worried about his competence.
