We may have a frontrunner for the next Economic Idiot Award (it's depressing to think there's at least one deserving recipient daily). Daniel Sneider of the San Jose Mercury News writes (registration required):

"This is unprecedented territory, C. Fred Bergsten, the director of the Institute for International Economics, told the Council on Foreign Relations. He takes a decidely darker view of the future.

To keep going, the United States borrows about $5 billion every working day from the rest of the world. ``If we didn't get it, we'd have no investment, we'd have no growth, we'd have no productivity, we'd have no nothing,'' Bergsten said."

Assuming Bergsten is quoted correctly, he should head an Institute for Flat Earth Economics. It's just silly to think that if we didn't have the $5B inflow from the rest of the world that we'd have no investment, growth, or productivity. Static-thinking Bergsten apparently cannot fathom the possibility that, absent access to cheap foreign capital, Americans just might save more on their own.

NOTE: It isn't even clear that the premise of Bergsten's statement--that Americans "save virtually nothing"--is correct. For example, David Malpass argues otherwise in yesterday's WSJ (subscription required). A longer discussion will have to wait for a future post ...