Articles of category "US deficit"

Since the collapse of the share market bubble in 2000, the US has come to increasingly depend on an inflow of capital from the central banks of Asia to cover its debts?so much so that more than 75 percent of all the balance of payments surpluses of the rest of the world are used to finance the US deficit. The danger to the stability of the global financial system lies in the fact that, at a certain point, this inflow may cease, sparking a rapid fall in the dollar?s value, a rise in interest rates and the onset of a US and global recession.

The United States is currently borrowing $665 billion annually from foreign lenders to finance the gap between payments to and receipts from the rest of the world, an amount equivalent to $5,500 per American household. This borrowing entails serious costs for the U.S. economy. However, these costs have been hidden for the past few years, predominantly by the historically low interest rates, which resulted from the Federal Reserve?s attempts to spur economic recovery after the 2001 recession and from a downturn in domestic investment.