Accumulation and Secular Stagnation in the United States after the Turn of the Millennium

Abstract

A US current account deficit implies that foreigners spend less in the US than they earn from the US. If they intend not to increase their US spending in the future, they are accumulators. The mercantilist policies of Southeast Asia and China, which involved hoarding dollar assets to build up buffer reserves and to support undervalued currencies, was a form of accumulation. They did not intend to spend their dollar savings, for doing so would undermine their objectives. Top income earners who intend to leave large bequests to their heirs are also Accumulators. Mercantilist driven current account deficits and income concentration both increased markedly in the 2000's. The resultant Accumulation lowered US trend growth and increased volatility; a predicament that has been called "secular stagnation".