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This is not an echo chamber. It is not moderated. You keep site Admin happy, you can post what you want. We all know there is trouble here. The debt limit was recently raised again. It is now over $9 trillion. That's 3/4 of a year's GDP. (Contrary to what one site member belives, GDP does NOT measure economic activity of US companies out of the country. That's GNP.) The federal budget deficit: research.stlouisfed.org The federal budget: research.stlouisfed.org gpoaccess.gov US GDP: research.stlouisfed.org It was $13.2 trillion in 2005. If revenues exceed income, the difference must be borrowed. This goes on the "national credit card"- -the federal debt, financed primarily by US bond sales. The debt: treasurydirect.gov Bureau of the Public Debt: publicdebt.treas.gov useconomy.about.com Much of the debt instruments isued by the US gov't are in foreign hands. bernan.com research.stlouisfed.org The Cassandra argument: oftwominds.com A counter to the oft-heard Cassandra argument. foreignaffairs.org The US$: quotes.ino.com The assumption is often made that foreign holders of US debt would not employ the "nuclear option" - selling their holdings and driving the value of the US$ yet lower. The argument is they would only hurt themselves because by buyinhg those bonds they are allowing Americans to buy their products. This assumes the US is their only possible market. While the US is currently the world's larget importer, this could change. China and India, for example, could turn around, pay their own labor force more, and sell their product internally, raising their own standard of living. Other nations, becoming increasing prosperous, also become possible replacement markets. There are other reasons they might. Some would be interested in decreasing the power and influence of the US. Others, holding a depreciating asset likely to depreciate further, would see no sense in holding. | ||||||||||||
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