[GordonAShumway]

> why the EU doesn’t consistently run trade deficits.

It’s because, comparatively, the EU doesn’t run as massive fiscal deficits, nor is the EUR the primary reserve currency.

Keep in mind that what the fed article is calling a “saving gap” is really more of a fiscal gap that been plugged by US Treasuries.

[User23]

More precisely it’s because the EU has no fiscal unified fiscal policy. Every member is a currency user of a foreign currency it must acquire from the ECB.

Wynne Godley explained this all nicely in Maastricht and All That.

[atq2119]

> Keep in mind that what the fed article is calling a “saving gap” is really more of a fiscal gap that been plugged by US Treasuries.

They're two sides of the same coin, but the levers of control and causality aren't symmetric.

In particular, the US government doesn't have direct control over the savings behaviour of anybody, especially not of people outside the US.

That's why most policies that aim to reduce the US government deficit are bound to either fail or have undesirable negative effect elsewhere.