How to Reduce a Deficit in a Global Economy?

If we see a reversal of globalization, the surplus countries need somewhere to put their excess savings. Unemployed workers have negative savings and so if your current account surplus comes down rapidly, that hurts your export sector. But you don't have many options, what China did in 2010 was they said, we don't want savings to come down through a rise in unemployment. So we're going to increase investment enormously.

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