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Signs That The World Will No Longer Fund The US Deficits

Discussion in 'The Economy' started by Chris C, 20th Nov, 2008.

  1. Chris C

    Chris C Well-Known Member

    2nd Apr, 2008
    Brisbane, QLD
    Japan economists call for 'Obama bonds'     : Information Clearing House - ICH

    It is quite scary to think what might happen to Australia should the US take a course of devaluing their dollar to enable them to repay their foreign loans, considering that this would no doubt hurt nations like China who have traditionally tried to support the $US through the purchase of US Treasuries to allow Americans to continue to consume China's exports that have been driving their economy.

    Whilst I see the devaluation of the US dollar as potentially only one of the viable solutions for the US economy in the long run given that the weaker dollar would enable easier payment of foreign debt and reductions in their current account deficit driven by reduce imports and increased exports which would potentially help restart their economy. Though the fall out of such a move will require many other major economies around the world to cop some heavy loses on the chin, namely China & Japan as well as any countries that were reliant on export to the US.

    Interesting times just ahead...