Diversify Out of U.S. Treasury Bills- Lawrence Summers Tells

“Think about it. If a country is able to deploy 10 percent of GNP in a way that produces an extra 5 percent return, that is half a percent a year in free money to the central government. That is a number that compares on a global scale rather favorably with the magnitude of IDA. It is a number that in many countries compares, is not insignificant relative to federal contributions for healthcare or education. It is a number that in many countries half a percent GNP is in excess of the level of spending on combating, uh, AIDS, and it is potentially available simply by investing resources more aggressively."

Lawrence Summers, talking at CGD recently, suggesting that developing countries with unusually high levels of reserves should shift part of their holdings from U.S. government debt to a diversified international portfolio and the higher returns got could be better put to development needs.

See the video of the event.

Related:

Speech made by Summers on Global Imbalances at Central Bank of India

Morning Coffee Videocast: The Inflow of Capital to the United States

Joseph LaVorgna, chief U.S. fixed-income economist at Deutsche Bank Securities, talks with Bloomberg's Tom Keene about the outlook for the U.S. economy and Federal Reserve monetary policy, the impact of the Fed on bonds, and the performance of the U.S. housing market.

An earlier post about Summers and a profile of him at TCS.

Rumsfeld's letter of thanks to Summers

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This page contains a single entry by Paul published on June 19, 2006 11:35 PM.

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