Debt and Denial
Ocala.com, February 18th, 2006
Last year America spent 57 percent more than it earned on world
markets. That is, our imports were 57 percent larger than our exports.
How did we manage to live so far beyond our means? By running up debts
to Japan, China and Middle Eastern oil producers. We're as addicted to
imported money as we are to imported oil.
Sometimes large-scale foreign borrowing makes sense. In the 19th
century the United States borrowed vast sums from Europe, using the
funds to build railroads and other industrial infrastructure. That
debt-financed wave of investment left America stronger, not weaker.
But this time our overseas borrowing isn't financing an investment
boom: Adjusted for the size of the economy, business investment is
actually low by historical standards. Instead, we're using borrowed
money to build houses, buy consumer goods and, of course, finance the
federal budget deficit.
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