In discussing the U.S. financial account surplus, a Wall Street Journal editorial made the following observations:
[Much] of it goes to finance an investment shortfall in the U.S., especially government borrowing. Yet Americans are making millions of individual decisions about how much to save, and foreigners are not forcing Washington to borrow. If government weren’t gobbling up that capital, more of it would go into the private economy.
a. What does the editorial mean by an “investment shortfall in the United States”? In what sense does a financial account surplus finance that shortfall?
b. What does the editorial mean by asserting that if the government weren’t “gobbling up that capital,” it would go into the private economy?
c. Is there a connection between the federal budget deficit and the financial account surplus?