Proportionality - Moderation In All Things

In a world of limits, proportionality has important implications.

For example, if New Zealand runs a 10% current account deficit, that has very serious implications for New Zealand, but very little effect on the rest of the world. A 10% current account deficit requires $12B USD of external funding. Alot of capital for a small country like New Zealand, but not alot in the global scheme of things. Conversely, if the US runs a 10% current account deficit, then that requires $1.4T in external funding. That $1.4T is a big call on global savings ("crowding out").

Under Bretton Woods II the game has been for surplus countries to recycle those savings back into the US. But in the current environment, those surplus countries are looking more inward, and are looking at utilizing those savings for domestic purposes. The question then becomes, where is the money going to come from to fund the US deficits?

I dunno. But moderation in all things is what my mother used to tell me. When you get too far out of whack, that is when crazy things happen.