Savings and investment on the global level

Ex post, global savings and investment are equal. But it is important to examine the savings-investment equilibrium , and in particula r (we have been watching since 1980): The change in the equilibrium real interest rate since the early 2000s shows that there are ex ante excess savings; The part of global private savings that finances the global fiscal deficit (the rest finances global private investment); the accumulation of fiscal deficits or the part of private savings that finances them leads to the public debt; The way in which private savings finance private investment; it may be direct financing (purchase s of equities , direct investment in equity) or intermediated financing (private savings are invested in bank deposits and investment is financed by debt). The total global debt therefore results from public debt and the intermediation of the financing of private investment by global private savings. It is therefore partly expansionary fiscal policy (fiscal deficits) and partly the choice of intermediated and not direct financing of private investment by private savings that push up the global debt ratio. The choice of intermediated global financing may be the result of: Low interest rates (expansionary monetary policy); A search for risk-free assets by savers, who therefore invest in bank deposits and not in corporate equities.