Using what you have learned online this week (and using the video content below) about the savings-investment identity for an open economy, interpret and discuss the following statement within the context of the identity. Statement: "If I owe you $100,000, you own my blood, but if I owe you $1,000,000,000, I own your soul." a.
What does this statement say about the debt leverage high-indebted economies have in the global economy?
b. How does a highly indebted economy's external borrowing of savings from the rest of the world (financed by running large trade deficits as a share of the global economy) impact other economies' abilities translate domestic savings into domestic investment if such domestic savings is being lent to larger-indebted economies?
c. Would such external financing by highly indebted economy crowd out domestic private investment in such smaller economies? Why or why not?
d. Finally, does this suggest countries that save the least and borrow the most for investment will grow much faster than countries that save the most?
