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Decline roomer initial

stephen roach are we missing here the balance sheet dynamics of this great crisis are we missing with the fed with this fiscal policy the balance sheet challenges to come yeah absolutely tom i mean you know let's just take my favorite metric of balance or lack thereof in the united states the net national savings rate the combined savings of businesses individuals in the government sector adjusted for depreciation it stood at 2.9 percent on a revised basis of national income before the pandemic hit it's going into record territory right now because exploding budget deficits are more than offsetting uh the boost in household savings what that means is a massive record current account deficit and it's one of many reasons why i have taken a very strong and bearish view on the u.s dollar uh which has been very weak in the last few weeks okay i think this is the early stages of the dollar's decline i'm upset folks because i want to do like a four-hour conversation on this you don't hear this too often about net nation national savings but this is like econ 101 with dr roach okay steve that's great but the constraint on that as martin feldstein said for years is that weak dollar call is stronger euro just as one example when does strong euro impinge on euro exports when do we get back to almost plaza accord like dollar str uh you know a dollar weakness here well look the dollar's got a long way to go to match the 33 percent drop that occurred uh during 1985 to fair fair so there's plenty of downside to go and i think that the the the surprise in the euro from my point of view and i'm a congenital euro skeptic has been this breakthrough on uh paying european fiscal policy and the pan-european sovereign bond issuance to come with it which came with this remarkable compact led by angela merkel and emmanuel macron a few weeks ago with the next generation eu fund and so as europe now finally has a fiscal policy to go along with its single currency and central bank the european monetary union now satisfies finally uh the uh the conditions of an optimal currency union and that's a big deal for a country and for a currency that's undervalued rather than overvalued like the dollar