The owner of the reserve currency has to run a current account deficit, by definition. That means that the reserve ccy status exists to be "abused" (not sure that's the word I'd use).
More trouble for US: China now downgrades its ratings BEIJING: The world may still be debating the consequences of the US federal government's decision to raise the country's debt limit. But China's State-controlled credit rating agency, Dagong Global Credit Rating Co., has cast the first stone by pushing US rating into negative territory. The move might mean drastic cut in China's purchases of US bonds, which will put US borrowings in serious jeopardy. China is the largest foreign holder of US debt, with holdings amounting to 1.15 trillion US dollars as of April end. "This incident will definitely exert its continuous impact on investors' confidence in US Treasury bonds, affecting the stability of the US debt income," Dagong said on Wednesday while announcing it has cut the credit rating of the United States from A+ to A with a negative outlook. Moody's, the international rating agency last month put US credit rating on a watch list. A final call from the international agencies after the latest US move is now expected. Last Monday, the US House of Representatives approved legislation to raise the country's debt limit by at least 2.1 trillion US dollars and cut federal spending by 2.4 trillion US dollars, one day before a threatened default. The interests of the country's creditors are short of systematic protection both politically and economically, the Chinese agency while explaining its decision to downgrade the US rating. It has also recently downgraded Poland's sovereign credit rating. Dagong said the United States has to reduce no less than four trillion US dollars in its fiscal deficit in the coming five years to sustain its liability scale. The increase in US debt ceiling shows there will not be any positive changes in factors that will influence the country's debt-paying ability in the long run, it said.
I don't believe that taxes were created by God ... And I don't quite understand why if the government can't manage its money and expenses, it has the right to take more money from those who know how to do it. It's illogical.
you should know that 'bastard politicians' want to spend more to give some juice to the economic growth so that they can get reelected to their offices. They fight for funding of the programs that come to their electorates.................and it does not matter if that funding is as a result of debt or begging or robbing etc. I agree with Reagan piling little debt to defeat communism but after 1991 it should have been back to balanced books. However, in a way US is following a communistic system in a capitalist set up, where government keeps on providing cash/resources and no one cares how it is spent. It is all good till the time treasury has dollars to spend and waste.
who to blame for U.S. exploding debt? each and every of greedy, irresponsible, delusional americans. they are the ultimate reason why u.s. public finances are in the deep trouble. who borrows money like crazy to buy useless stuff? who buys 3x overpriced homes? who votes for bush and is not enraged at: America's wars , pentagon stealing 5 trillion and Fed giving away 16 trillion? who drinks coca cola, eat at mcdonalds, buys drugs which are causing huge harm and then the whole nation must waste trillions on "health care"? who is so naive to believe that there can be a drug or wonder pill against cancer? 3 trillions were spent to find it. no success. usa will spent many times more, and more americans will die from cancer. who likes marijuana and other drugs to be illegal? 75% of crimes are related to the fact that drugs are expensive due to being illegal. prisons costs billions, police, CIA, etc. the american society will get exactly what they asked for: bankruptcy. but not state bankruptcy. more and more individuals will simply run out of the last cent and sink in debt. the fed owners, obama, apple inc. and the oil cartels will always be in a great shape.
the difference is that times have changed. the US in the 30's was a capitalist country that could stand on its own two feet. Stalin was wrong if he said such a thing. link? Putin is right. America's standard of living is high because of borrowing. game over. stagnation, if lucky, will be the best outcome. Argentina of the bad old days is the future of the US.