How savings in Europe and emerging countries are financing the rise in US share prices

The Biden administration’s stimulus package (USD 1.9 trillion in income support, USD 2.2 trillion investment plan) will lead to considerable fiscal and external deficits in the United States. It is then important to realise that: A significant proportion of the public transfer payments made will be used to buy shares and that the remainder will drive up growth and growth prospects, all of which will lead to a sharp rise in stock markets; The United States’ deficits are financed by attracting savings from Europe and emerging countries (other than China) to buy US Treasuries. This leads to a terrible conclusion for the euro zone and for emerging countries: it is their savings that are financing the rise in US share prices, through their financing of the United States’ twin deficits.