Financial Rigor Will Assure U.S. Dominance

There are signs that U.S. debt is becoming a vulnerability to the world's only superpower. Indeed, I believe that the financial argument is the most powerful one on the side of those who do not believe the U.S. can sustain its current comparative strength. While I haven't researched this issue, I do believe that a growing economy is at least in part ameliorative of the negative effects of overspending. That said, I find it hard to gainsay the position of those who say that federal spending should be reined in.

I have never been satisfied with our balance of payments or the trade imbalance we have with China, Europe, and other regions around the world. This is a fairly complex area of discussion that requires some degree of sophistication in dealing with the relevant concepts. For example, in a world where each country is to some degree both the debtor and creditor, what means are available to leverage these positions? For not only is the U.S. the recipient of investors' money, but it is also directly and indirectly an investor in the PRC and other developing nations. The U.S. is also a major, if not the predominant, voice in international financial institutions such as the World Bank, which as always had an American president.

Another factor to consider is the revaluation of the yuan. Since we have pressured the PRC to increase its value, and the PRC has definitely made some moves accordingly, there may be some relief in sight from the point of view of our trade deficits.

The continuing deficit should be reduced; nevertheless, I do not agree, at this point, that it is a critical factor that threatens U.S. dominance overall. It is much too early to forecast this effect, which may never occur.