Gary Dorsch
Three decades of massive trade deficits have turned the United States from the world's top lender to the world's largest debtor, dependent upon the whims of the so-called emerging nations – who are laden with huge foreign currency reserves – to finance the bailout of Wall Street oligarchs and President Barack Obama's social programs.
Foreigners own roughly half of the US government's publicly traded debt, some $3.47 trillion, representing nearly 25% of the size of the US economy, the highest level in history. If foreign lenders were to significantly reduce their purchases of US Treasury notes, without even dumping their current holdings, US long-term interest rates could zoom higher, and the US Dollar could crumble.
That would deal a double whammy to the US economy. Higher yields on Treasury debt could translate into higher mortgage borrowing rates for homebuyers, weighing on the housing market, while a weaker US Dollar could lift the price of crude oil to above $70 per barrel again, inducing a fresh "Oil Shock" to the world economy.
The Gravity-Defying Dollar | Gold News
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