Re: Article in THE ECONOMIST by Davidson

["Hugh Whinfrey" <econ@xxxxxxxxxxxx>]

> >According to Mr Davidson, the world cannot risk America stopping.
> >America's external deficit means an extra $500 billion is going into
> >circulation in the world economy each year. If America reined in its
> >current account, international commerce would suffer a liquidity crunch,
> >as it did periodically under the gold standard. Hence America's deficit is
> >neither a "meaningless concept" nor a lamentable drain on world savings.
> >It is an indispensable fount of liquidity for world trade.
>
> Reminds one of the words of a previous U.S. Treasury Secretary (John
> Connally): "It's our currency but it's your problem."

The flip-side of the "engine driving world trade" argument is
the "American overconsumption" argument. They're the
same thing as I see it, just with different spins.

Hugh