from Follow the Money

I guess I am a secret Austrian too

January 19, 2005

Blog Post
Blog posts represent the views of CFR fellows and staff and not those of CFR, which takes no institutional positions.

And I thought I was just a former Treasury staff economist with an unhealthy obsession with how the US is funding its enormous trade and current account deficits, and more willingness than most to spend time rummaging around central bank web pages.

The Marginal Revolution’s Tyler Cowen provide a fair -- and remarkably succinct -- summary of many of my views, though perhaps not DeLong’s. If only he would now help teach me how to play the options market...

I do worry about a country that imports 15% of GDP and exports a bit less than 10% of GDP -- especially if non-oil imports are growing faster than exports even when the the world economy is strong. I worry a bit more about the United States’ rapid external debt accumulation because the US external debt-to-export ratio is already close to 300% (400% is the level that did in Argentina). I generally worry less about current account deficits that stem from a surge in investment, especially a surge in investment in the export sector, and worry more about deficits that stem from rising consumption (relative to income) and structural government budget deficits. Current account deficits of close to 6% of GDP v. exports of 10% are somewhat unusual, deficits of that sized financed in part by selling ten year debt at 4.2% nominal interest rates are even more unusual.

Does that make me an Austrian? Or someone who takes external sustainability analysis seriously?