Total injections = total leakages, or
EXP + G + I = IMP + T + S
(G-T) = (IMP-EXP) + (S-I)
The Saving/Investment imbalance is private wealth accumulation that is in excess to private domestic wealth creation.
The (IMP-EXP), the trade deficit:
Official Account + Capital Account + Current Acct = 0.
Break up Current Acct,
Official Account + Capital Account + Net Income Inflows (+etc.) + (EXP-IMP) = 0
(IMP-EXP) = Official Account + Capital Account + Net Income Inflows
(G-T) = Official Account + Capital Account + Net Income Inflows + (S-I)
So the private wealth created by the public debt can either end up in the Central Bank (monetized), in the pockets of foreign holders of wealth, in the pockets of the domestic holders of wealth, or be, in effect, spending a net income windfall.
It doesn't automatically create the capital inflows. I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
They are not algebraic symbols, but, they are Macroeconomic shorthands. I get started with the common algebraic symbols in econ, I gotta print out a cheat-sheet for my greek character html entities. I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
"Investment" means Investment in productive capacity, not "financial investment" in terms of buying a financial asset.
Buying and selling stocks and bonds (debentures) is not treated as Investment in Macro because:
