Re: Article in THE ECONOMIST by Davidson

["Gunnar Tomasson" <gunnar.tomasson@xxxxxxxxxxx>]

Re. the following:

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.

Comment.

The spigot on this "fount of liquidity" is controlled by America's
debtors/deficit spenders and creditors/deficit financers, none of whom give
a hoot about the world economy when looking out for Number One - and quite
properly so.

When either side acts to put the punch bowl aside, there will be
consequences - for the world economy and those 'regulators' of the world's
monetary affairs who have looked the other way for the past three decades.

Gunnar














----- Original Message -----
From: "Ric Holt" <rholt@xxxxxxx>
To: <pkt@xxxxxxxxxxxxxxxx>
Sent: Friday, September 13, 2002 1:25 PM
Subject: Article in THE ECONOMIST by Davidson