Christoph
03-01-07, 11:31
01/02/06 "Information Clearing House" -- -- Will Congress allow President Bush to waste another year on his Iraq misadventure while serious problems overwhelm the United States?
During 2006 while the US government focused on the deteriorating situation in Iraq, the US dollar declined sharply against many currencies. By December China’s central bank was expressing its concern that the massive US trade deficit could lead to a run on the dollar and to an international financial crisis.
Since WW II the US dollar has been the world’s reserve currency, the currency in which oil is billed and international trade accounts are settled.
The low US saving rate means that Washington’s budget deficits must be financed by foreign lenders, who are awash in US Treasury bonds. The massive US trade deficit means that foreigners acquire US assets as payment for US consumption of goods made abroad.
Foreigners are worried about their large dollar holdings, because there is no indication that the US can reduce either deficit. The war against Iraq has run up the US budget deficit, and the practice of US corporations of producing offshore for their US markets has increased the US trade deficit. Every time a US company moves its production abroad, domestic output is turned into imports.
China has indicated that it will continue to accumulate dollars, but at a slower rate by trading some of the dollars for other currencies.
......
http://www.informationclearinghouse.info/article16049.htm
During 2006 while the US government focused on the deteriorating situation in Iraq, the US dollar declined sharply against many currencies. By December China’s central bank was expressing its concern that the massive US trade deficit could lead to a run on the dollar and to an international financial crisis.
Since WW II the US dollar has been the world’s reserve currency, the currency in which oil is billed and international trade accounts are settled.
The low US saving rate means that Washington’s budget deficits must be financed by foreign lenders, who are awash in US Treasury bonds. The massive US trade deficit means that foreigners acquire US assets as payment for US consumption of goods made abroad.
Foreigners are worried about their large dollar holdings, because there is no indication that the US can reduce either deficit. The war against Iraq has run up the US budget deficit, and the practice of US corporations of producing offshore for their US markets has increased the US trade deficit. Every time a US company moves its production abroad, domestic output is turned into imports.
China has indicated that it will continue to accumulate dollars, but at a slower rate by trading some of the dollars for other currencies.
......
http://www.informationclearinghouse.info/article16049.htm