Is German (and Japanese and Chinese) frugality the problem?

This is a ludicrous idea. Lack of self restraint is a vice that cannot be blamed away.

Without the overseas savers, I could have MY savings in a nice safe government bond ladder ... earning good interest, right?

This might tie into our national obsession with equities. Savings in bonds is not usually "enough" for a safe retirement, so a cohort of boomers went into very high equity allocations.

I assume germans and japanese don't buy our stocks the way they buy our bonds.

(You really should talk to your page design crew about freeing up some whitespace for commentators' paragraph breaks. I hate being a second class citizen.)

Hey, Justin, I am a Chinese who read your column for a long time.

Just provide some insights why Chinese people save a lot.

China right now does not have a universal health care system for all people . If someone has cancer, he or she will have to pay the Medicare bill largely by themselves. Same thing in education, China government only provides compulsory education for 9 years, meaning that families need to pay full tuition for high school and college for their kids. Same thing in housing and other social welfares.

Saving is actually a deed showing lack of security. It is the root of frugality.

I don't think this is a problem unless Americans don't wish to conform to European standards. It is precisely what happens when you export jobs to a country where the cost of hiring a worker is cheaper. The corporations save more money, but they are putting less incentive back into their own local economy where the local workers have less disposable income unless they find other means of creating producing income. It is often said that foreign worker will now have the money to buy the host corporation country's goods, but at what price and do they make up for the fall in domestic demand. The countries mentioned above are huge producer nations which have relatively little consumption...especially China...or is it that they just have relatively little disposable income. The same might be said for Germany (I lived there for several years) where the tax rate is fairly high or Japan where the cost of living is one of the highest in the world. In conclusion, there is no place like Texas.

German, Chinese, and Japanese frugality is not the problem. But, China and Japan financed the borrowing spree long after it was clear it was unsustainable. Such lending was not frugality, but wild profligacy. Why? Because there is no sheriff that will obey the order to foreclose on American government assets should the US default.

The "frugal" can choose to try and continue to subsidize exports to the rest of the world, and thus export the pain, but it likely won't work, and thus growth must come from internal consumption.