I think one of the things JNJ is getting at is among the reasons “Americans save little and consume lots” are the policy distortions created by the things he’s talking about, and as illustrated in Roger Garrison’s power-point here: Credit expansion creates not only malinvestment, but by artificially lowering interest rates, dis-incentivizes savings and incentivizes a high-time preference and thus overconsumption (higher present consumption than there would naturally be under a truly free market).
It creates a tug-of-war that contributes to all the “structural deficits.”
