We have American Consumers who insist on purchasing Imports much in excess of Exports. We feel warmed by a Congress and President whom believe financing by Debt stands far preferable to taxation. No one can precisely define what the Government deficits will be, day-to-day, because Our administration keeps selecting items to be taken off-Budget, because the items may cost too much to align with Projections of Government spending. Richard Cooper thinks the Government deficit is both sustainable and logical. Peter G. Peterson states the United States is currently absorbing two-thirds of the total current surpluses of the entire World. He says We are importing $4 billion of foreign capital per day. Brad Setser asserts Japan has ceased to acquire Dollar stocks, and Korea may have made its last intervention to support the Dollar.
Almost all Economists worry about the effect all of the Above will have on Interest rates. They tend to be insulated within their own framework and World. Their fear consists of high Interest rates cooling off the Economy, leading to a Recession. There may be an even worse scenario!
American Consumers do not actually produce, and they consume more than Anyone else. They support a Government which does not tax, but spends far more than any other Government in the world. George W. Bush proposes more and more programs, with less and less taxation, and a deep desire to vastly increase the Federal deficit. There is absolutely no attempt to curtail American consumption.
China is preparing to create a South Asian Union, along lines of the EU. The industrialized East--Japan, S. Korea, and Taiwan--are showing marginal desires to transfer from Dollars to Euros. The EU is pursuing policies to integrate their markets, and independent provision of resources and Trade partners in the Third World. OPEC nations are raising Dollar value of Energy prices, clearly conscious of the devaluating Dollar.
George W. Bush may like his agenda, but he will realistically find the World unwilling to underwrite his agenda. The World already finds his 'less taxation' agenda to be a wild denial of reality. The World will not like the added 'floated' Dollars for the Proscription Drug law, nor will it find the bill for 'privatization of Social Security' amusing. But what is the Author trying to say, Some may ask. The answer will be that Treasuries subscriptions may not be filled at any price, leaving the U.S. Government only two Options: cut Spending, or simply print more Money. This may come about with Walmart offering foreign Imports on Sale, at three times their current price. lgl