World Saving and Investment: CNN Reads Brad Setser
NEW YORK (CNN/Money) – Some of the billions in windfall profits going to overseas oil producers are coming back to the United States in the form of foreign investment, according to a published report. The Wall Street Journal reported Tuesday that oil exporters like Saudi Arabia are saving and investing far more and spending far less than they did in earlier oil booms. And the newspaper says that the oil money being invested in U.S. assets are helping to keep long-term interest rates in check here, despite the steady pace of rate hikes by the Federal Reserve.
Followers of Brad Setser realized that the Saudis as well as other nations are saving in part by accumulating U.S. assets – with Brad lately noting:
Savings has been outsourced to the poorest countries. And their central banks play a huge role in the global flow of funds.