The great American investment boom
This is a sign of an economy that is prioritising the future over the present
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https://www.ft.com/content/8c40598a-a946-4901-a59c-c513689a5351
National income and product accounts (NIPA) can appear boring. But, like all forms of accounting, they can sometimes provide useful insights.
In NIPA, a country’s production (GDP) and imports can go towards private consumption, government consumption, private investment or exports. Imagine that a country either produces or imports a pile of potatoes: each potato can be eaten by a citizen (private consumption), eaten by the government (government consumption), planted in the ground to make potatoes in the future (private investment) or sent to a foreign country (exports).
What might be less obvious is that two of these uses — private investment and exports — build a better future for citizens and their children, while the other two — private consumption and government consumption — do not.
Investment — the building of factories, office buildings and houses, along with the installation of equipment — is the real, physical manifestation of an economy prioritising the future over the present. Physical investment produces goods and services in the future but not today. Likewise, when a country exports more than it imports, its residents therefore must be engaged in net foreign direct investment or purchasing financial instruments such as currency, bonds, stocks or land deeds from the rest of the world. That is, the country is saving for its future. When a country imports more than it exports (as the US has been for decades), its residents must either be spending the proceeds of their net foreign direct investment or selling financial instruments to the rest of the world to pay for the net imports, implying the country is either borrowing or dissaving.