A tall claim. Do you really think a CA deficit of 1.0% gdp is unsustainable?

Which part of "in the absence of nominal growth" did you find it difficult to parse?

Of course having a 1 % deficit is unsustainable if you have 0 % growth.

Germany e. g. did run a small CA deficit for most of the second half of the 20th century. That did include years without growth. Wasn't really unsustainable.

It most certainly did not. Nominal growth was never below 4-5 per cent per year between 1950 and 1980 - and usually it was somewhat above that level.

And in any event there is a major difference between a year of flatlining nominal growth and a decade of same. Which is what we're looking at if governments don't start spending money to prop up employment.

Perhaps more to the point Italy has now run a small CA deficit and very low growth for twenty years. After twenty years can you really still say unsustainable?

Yes.

Past performance is not a guarantee of future performance. We have been extracting and burning oil on an industrial scale for nearly fifteen decades. Nobody of sound mind would presumably argue that this is sustainable.

In the absence of negative feedback loops on CA surpluses, current accounts imbalances continue right up until they don't. And then you have a crash.

- Jake

Friends come and go. Enemies accumulate.