• The existence of excess savings over investment produces an economy that works differently.
• It basically enables the public sector to increase spending for free.
• This is most visible in the deleveraging stage after the burst of an asset bubble, where policy vice becomes virtue and public releveraging needs to compensate private deleveraging.
• But some of the same mechanisms are operative even in the absence of bursting bubbles, caused by a global savings glut.

Boom Time For Liberals | Seeking Alpha