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December 5, 2004
Fate of the US dollar
The dollar's fall, along with the trade and budget deficits, is a classic symptom of a country living beyond its means. Twenty years ago, American households saved about nine cents of every dollar they earned; today, they save less than a penny. The federal government is spending about four hundred billion dollars a year more than it raises in taxes, which means that the Treasury has to sell about thirty-four billion dollars' worth of bonds every month to remain solvent. By far the biggest purchasers of Treasury bonds are the central banks of China and Japan, which, last year alone, accumulated some four hundred billion dollars' worth of them. Since the purchases were made in dollars, they also provided much needed support for the currency.
The New Yorker: The Talk of the Town
Posted by thdyck on December 5, 2004
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