Economic codependency?

Posted by Scriptaty | 8:20 PM

Some people argue, however, it is unlikely foreign central banks would stop supporting the U.S. Treasury market. “If they cease it will send the dollar spiraling even lower, which would damage their economies, too,” Sloan notes.

Goldstein agrees.

“The Europeans and Asians complain about the current account deficit, but in fact they need it,” he says. “We act as a sponge for them. They can earn more money by investing here than anywhere else.”

The bottom line is American consumers are buying foreign products. “They complain that we import too much,” Goldstein adds. “But where do we import it from? They need us as a market. This is not just a story about us consuming too much and investing too little. It is a story about everybody else –– they don’t consume enough.”

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