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$U.S. in a tailspin? « Previous | |Next »
November 6, 2004

The US dollar has continued to decline in global currency markets. I presume that it has been caused by fears about the mounting U.S. budget and trade deficits.

The rising budget deficit and ballooning trade imbalance of the United States means that it is running up a foreign debt of record-breaking proportions. The US already requires a daily infusion of $1.2 billion in foreign investment just to keep the greenback's decline under control.

The Bush Republican policy agenda of tax less and spend more will make things worse.

Could these deficits threaten the financial stability of the global economy? They could. There is a tipping where the East Asian banks, who have been trying to prop up the dollar and maintaining their exports (to the US), decide that placing large amounts of business in US dollars is a poor investment.

The IMF reckons these deficits threaten the stability of the global economy.

Go read, if you have a mo.

| Posted by Gary Sauer-Thompson at 1:18 PM | | Comments (0)