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April 21, 2014

Andrew Silow-Carroll: Passoverkill? Suggestions to make next year's seders even more culturally sensitive

Sara Israelsen Hartley: Seeking the Divine: An ancient connection in a new context

Christine M. Flowers: Priest's execution in Syria should be call to action

Courtnie Erickson: How to help kids accept the poor decisions of others

Lizette Borreli: A Glass Of Milk A Day Keeps Knee Arthritis At Bay

Lizette Borreli: 5 Health Conditions Your Breath Knows Before You Do

The Kosher Gourmet by Betty Rosbottom Coconut Walnut Bars' golden brown morsels are a beautifully balanced delectable delight

April 18, 2014

Rabbi Yonason Goldson: Clarifying one of the greatest philosophical conundrums in theology

Caroline B. Glick: The disappearance of US will

Megan Wallgren: 10 things I've learned from my teenagers

Lizette Borreli: Green Tea Boosts Brain Power, May Help Treat Dementia

John Ericson: Trying hard to be 'positive' but never succeeding? Blame Your Brain

The Kosher Gourmet by Julie Rothman Almondy, flourless torta del re (Italian king's cake), has royal roots, is simple to make, . . . but devour it because it's simply delicious

April 14, 2014

Rabbi Dr Naftali Brawer: Passover frees us from the tyranny of time

Greg Crosby: Passing Over Religion

Eric Schulzke: First degree: How America really recovered from a murder epidemic

Georgia Lee: When love is not enough: Teaching your kids about the realities of adult relationships

Cameron Huddleston: Freebies for Your Lawn and Garden

Gordon Pape: How you can tell if your financial adviser is setting you up for potential ruin

Dana Dovey: Up to 500,000 people die each year from hepatitis C-related liver disease. New Treatment Has Over 90% Success Rate

Justin Caba: Eating Watermelon Can Help Control High Blood Pressure

The Kosher Gourmet by Joshua E. London and Lou Marmon Don't dare pass over these Pesach picks for Manischewitz!

April 11, 2014

Rabbi Hillel Goldberg: Silence is much more than golden

Caroline B. Glick: Forgetting freedom at Passover

Susan Swann: How to value a child for who he is, not just what he does

Cameron Huddleston: 7 Financial Tasks You Should Tackle Right Now

Sandra Block and Lisa Gerstner: How to Profit From Your Passion

Susan Scutti: A Simple Blood Test Might Soon Diagnose Cancer

Chris Weller: Have A Slow Metabolism? Let Science Speed It Up For You

The Kosher Gourmet by Diane Rossen Worthington Whitefish Terrine: A French take on gefilte fish

April 9, 2014

Jonathan Tobin: Why Did Kerry Lie About Israeli Blame?

Samuel G. Freedman: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Jessica Ivins: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Kim Giles: Asking for help is not weakness

Kathy Kristof and Barbara Hoch Marcus: 7 Great Growth Israeli Stocks

Matthew Mientka: How Beans, Peas, And Chickpeas Cleanse Bad Cholesterol and Lowers Risk of Heart Disease

Sabrina Bachai: 5 At-Home Treatments For Headaches

The Kosher Gourmet by Daniel Neman Have yourself a matzo ball: The secrets bubby never told you and recipes she could have never imagined

April 8, 2014

Lori Nawyn: At Your Wit's End and Back: Finding Peace

Susan B. Garland and Rachel L. Sheedy: Strategies Married Couples Can Use to Boost Benefits

David Muhlbaum: Smart Tax Deductions Non-Itemizers Can Claim

Jill Weisenberger, M.S., R.D.N., C.D.E : Before You Lose Your Mental Edge

Dana Dovey: Coffee Drinkers Rejoice! Your Cup Of Joe Can Prevent Death From Liver Disease

Chris Weller: Electric 'Thinking Cap' Puts Your Brain Power Into High Gear

The Kosher Gourmet by Marlene Parrish A gift of hazelnuts keeps giving --- for a variety of nutty recipes: Entree, side, soup, dessert

April 4, 2014

Rabbi David Gutterman: The Word for Nothing Means Everything

Charles Krauthammer: Kerry's folly, Chapter 3

Amy Peterson: A life of love: How to build lasting relationships with your children

John Ericson: Older Women: Save Your Heart, Prevent Stroke Don't Drink Diet

John Ericson: Why 50 million Americans will still have spring allergies after taking meds

Cameron Huddleston: Best and Worst Buys of April 2014

Stacy Rapacon: Great Mutual Funds for Young Investors

Sarah Boesveld: Teacher keeps promise to mail thousands of former students letters written by their past selves

The Kosher Gourmet by Sharon Thompson Anyone can make a salad, you say. But can they make a great salad? (SECRETS, TESTED TECHNIQUES + 4 RECIPES, INCLUDING DRESSINGS)

April 2, 2014

Paul Greenberg: Death and joy in the spring

Dan Barry: Should South Carolina Jews be forced to maintain this chimney built by Germans serving the Nazis?

Mayra Bitsko: Save me! An alien took over my child's personality

Frank Clayton: Get happy: 20 scientifically proven happiness activities

Susan Scutti: It's Genetic! Obesity and the 'Carb Breakdown' Gene

Lecia Bushak: Why Hand Sanitizer May Actually Harm Your Health

Stacy Rapacon: Great Funds You Can Own for $500 or Less

Cameron Huddleston: 7 Ways to Save on Home Decor

The Kosher Gourmet by Steve Petusevsky Exploring ingredients as edible-stuffed containers (TWO RECIPES + TIPS & TECHINQUES)

Jewish World Review Oct. 11, 2006 / 19 Tishrei, 5767

Better to Borrow or Lend? Rethinking conventional wisdom

By Paul Johnson


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http://www.JewishWorldReview.com | Charles Lamb wrote a famous essay, "the two races of Men." In it he refers to those who borrow and those who lend. Most people are brought up to believe it is better to lend than borrow. I certainly was. My father said to me, "Never borrow money. Never have an overdraft. Only take out a mortgage on your first home, and pay it off as soon as you can. Always pay bills by return post." I have followed this advice all my life. But is it good advice?


My friend Jimmy Goldsmith took the opposite view. He and I first met when he was 16 and had run away from school (Eton College). He'd won an accumulator bet at the horse races and thought it was time he began enjoying life. When he died, Goldsmith was a billionaire (in dollars). I once asked him, "What is the key to your financial success?" He replied, "Borrowing. I have become rich on other people's money."

OPPOSITE ENDS OF THE SPECTRUM
The argument — lend (save) or borrow? — applies to countries as well as to individuals. The Chinese, for instance, have traditionally been savers. It's an axiom of Chinese culture that a prudent man saves 40% of his net income. This axiom also applies nationally, in that China's policy has traditionally been to export the maximum and import the minimum. This approach led to trouble in the 19th century. Western countries, led by Britain, imported vast quantities of Chinese luxury goods but found it nearly impossible to sell anything there in return. Opium was the one exception — and the Chinese authorities did their best to forbid its sale to their citizens. Ultimately, Britain fought a series of wars, which became known as the Opium Wars, in order to force China to allow its sale.


Chinese financial culture has not changed all that much, even though the country is now becoming a major manufacturing power. China runs an enormous balance-of-payments surplus by pegging its currency low, so that its exports are cheap and its imports dear. This makes the Chinese feel good, morally. But, as in the past, there is a price to pay. Pegging its currency below market value means that China must spend more than $100 billion of foreign currency (chiefly U.S. dollars) annually in buying securities and other assets, largely in the U.S.


This brings me to American financial culture — spending and borrowing — which is just the opposite of China's. This culture was evident even in the colonial days of the early 17th century. If figures were realistically presented, I think they'd show that America has usually run a current accounts deficit. King James I's ministers persuaded him not to ban smoking in England because tobacco was the only crop earning the growing American colonies enough profit to pay for their imports of luxury and manufactured goods from England. Americans have traditionally spent up to the limit — and beyond — of their credit, believing that G-d, or the world economy, would provide. And it has. Like Jimmy Goldsmith, the U.S. has become the world's richest nation by using other people's money to finance its own spectacular and continuing growth.

WEALTH STORAGE
In the 15 or so years since 1990 the U.S. current accounts deficit has gone from 0% to 7% of GDP. America is able to do this by offering the rest of the world the biggest choice of wealth storage options — bonds and other assets — that they can buy with their savings, knowing these instruments are secure and will give a good return on investment. The truth is, if you make a lot of money by making cheap goods, as the Chinese do, or by selling expensive oil, as the Arabs do, you either have to spend your money, riotously, or save it. And if you choose to save, you have to put those savings somewhere that is secure and rewarding.


Thanks to its political and social stability and its record of a continually growing economy, the U.S. has become — almost unconsciously rather than through set policy — the biggest and most successful wealth-storage economy in history. It exports wealth-storage facilities in exchange for net imports of goods. A recent calculation by the American Enterprise Institute shows that foreign storage claims of U.S. assets are $13.5 trillion, or about 25% of U.S. wealth (about 10% of global wealth).


However, as with Jimmy Goldsmith, this borrowing has enabled the U.S. to become richer and richer. The U.S. also invests abroad and now holds about $11 trillion in foreign assets. That leaves net foreign claims on U.S. assets of about $2.5 trillion. But this is only 20% of one year's income for America's enormous GDP. Moreover, while wealth stored in the U.S. is mostly in short-term assets, American wealth stored abroad is chiefly in long-term assets, and those will grow in value — and grow faster — than wealth stored in the U.S.


The fact is, in the international economy there is no such thing as absolute borrowing or absolute lending; they are intertwined. As an individual, however, I prefer to stick with my father's advice, for I put peace of mind before other considerations. But for a giant nation like the U.S., the Goldsmith approach may make more sense.

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Previously:

08/22/06: Don't practice legal terrorism
08/08/06: A summer rhapsody for a pedal-bike
08/03/06: Why is there no workable philosophy of music?
07/11/06: Historically speaking, energy crisis is America's opportunity
07/06/06: The misleading dimensions of persons and lives
06/06/06: First editions are not gold
05/23/06: A downright ugly man need never despair of attracting women, even pretty ones
04/25/06: Was Washington right about political parties?
04/12/06: Let's Have More Babies!
04/05/06: For the love of trains
03/29/06: Lincoln and the Compensation Culture
03/22/06: Bottle-beauties and the globalised blond beast
03/15/06: Europe's utopian hangover
03/08/06: Kindly write on only one side of the paper
02/28/06: Creators versus critics
02/21/06: The Rhino Principle

© 2006, Paul Johnson

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