Adam Smith’s assertion that “Consumption is the sole end and purpose of all production” highlights the essential goal of both production and international trade. The article discusses how the structural excess savings in countries like China, Germany, and Japan are counterbalanced by the US’s current account deficit, which reflects the paradox of thrift identified by Keynes, where needed spending may not occur naturally. This imbalance, characterized by surplus countries failing to invest their savings productively, leads to political and economic tensions, evidenced by rising protectionism and the consequences of financial crises in Japan and China.
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