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Politics : Politics for Pros- moderated

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To: carranza2 who wrote (126795)	7/22/2005 10:49:16 AM
From: Elsewhere	Read Replies (3) of 793685

<The most obvious implication, naturally, if we seek to continue to fund our twin deficits, is that interest rates on T-Bills and therefore everything else that charges or bears interest goes up.> The assumption here is that the rate depends on supply and demand. Some economists contend that the rate mainly depends on the expectation of future inflation. <The most obvious one is an end to the housing bubble.> "Bubble" sounds as if high housing prices are pervasive throughout the USA. They aren't. <The budget deficit is not going to be seriously reduced from its present astronomical levels.> In absolute terms it's high, yes, but in relative terms it's not critical. Related reading: The Overstretch Myth By David H. Levey and Stuart S. Brown From Foreign Affairs, March/April 2005 Summary: The United States' current account deficit and foreign debt are not dire threats to its global position, as would-be Cassandras warn. U.S. power is firmly grounded on economic superiority and financial stability that will not end soon. foreignaffairs.org

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