from Follow the Money

Read Barry Eichengreen

March 30, 2006

Blog Post

More on:

United States

Budget, Debt, and Deficits

Trade

Eichengreen provides the best summary I have seen of competing views on the sustainability of large US trade deficits, along with the impact of sustained trade deficts on US external debt and the investment income balance.   He leans towards what he calls the standard view: what cannot go on forever, won't go on forever.  But he also clearly explains competing views, whether the "New Economy and Higher productivity make it all OK" view of Richard Cooper (and Michael Mandel), the "Savvy investor" view of John Kitchen (Cavallo and Tille have a similar argument) or the US isn't really in debt because of dark matter view of Hausmann and Sturzenegger and their various acolytes in the investment world.

Well worth reading.   And Martin Feldstein is worth watching.  He seems to subscribe to mainstream view.  He certainly thinks the dollar needs to fall.

More on:

United States

Budget, Debt, and Deficits

Trade

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