For more than 20 years, this mutually beneficial codependency has served both countries well in compensating for their inherent saving imbalances while satisfying their respective growth agendas.

Ben Bernanke, the US Federal Reserve chairman, once famously pinned the whole US current account deficit on a global savings glut.

Globalization and interdependence globalization

By increasing inflation, the Fed would turn real interest rates seriously negative, thereby coercing thrifty households into spending instead of saving.

First and foremost, there is the global savings glut, an idea popularized by current Federal Reserve Chairman Ben Bernanke in a 2005 speech.

Automatic Savers

America s Saving Surprise

Japan s Savings Crisis

Savings rates shot up.

Demand savings accounts

Term savings accounts

Saving. A domestic saving rate in excess of 50 has served China well.

Reciprocal representation

Reciprocal Representation

Both the savings shortage and savings glut hypotheses confuse accounting outcomes with causes.

But such a world requires that mutual respect replace mutual suspicion.

Most countries have introduced some form of forced savings (such as compulsory contribution to pension and provident funds) and provide tax incentives to stimulate long term household savings.

The natural interest rate was low because, as the Fed s current chairman Ben Bernanke explained at the time, the world had a global savings glut (or, rather, a global investment deficiency).

Balancing China s High Savings

In other words, the government s negative saving is being financed by the private and household sectors positive saving.

Globalization and interdependence

Potential mutual reinforcement

Globalization and interdependence

(a) Globalization and interdependence

America s Saving Rate and the Dollar s Future

Too Much Saving, Too Little Investment

Saving may also take the form of individual contributions to retirement accounts or employer contributions to corporate saving plans.

15th meeting Globalization and interdependence

16th meeting Globalization and interdependence

The process begins with tolerance and mutual respect.

Item 7. Globalization and interdependence

Shlomo Benartzi Saving for tomorrow, tomorrow

Cut Now, Save Later

Talk abounds of a global savings glut.

Why Are Savings Patterns So Different?

Talk abounds of a global savings glut. In fact, the world economy suffers not from too much saving, but from too little investment.

Oil rich countries tend to save a lot. Countries with serious internal crises or conflicts tend to save little.

Apart from accounting for the global divergence in savings rates, tight credit constraints in China might explain the country s high, and rising, savings rate especially as the large rise in national savings is attributable mostly to household savings.

Globalization and interdependence international migration and development

Globalization and interdependence

Globalization and interdependence P.56

Nine out of 10 either cannot save through their 401 plan, decide not to save or don't decide or save too little.

Since the saving of younger savers is now high and the dissaving of the older dissavers is low, the net saving rate is high.

As this change unfolds, the enormous willingness to save, and to tolerate high saving government policies, will fade.

Almaty is home to BTA Bank, which is the largest bank in Central Asia, Kazkommertsbank and other major banks.