EPRS Admin By / October 27, 2017

United States federal debt

Since the federal debt has increased significantly over the years, the USA has swapped paper (USD) against (imported) resources. The…

United States_ net international investment position

Since the federal debt has increased significantly over the years, the USA has swapped paper (USD) against (imported) resources.
The United States dollar is an international reserve currency. This means that the US needs to supply adequate amounts of this currency to international markets to satisfy the demand for reserve currency. However, ‘… there is no longer a fundamental global liquidity shortage that is intrinsic to the very functioning of the system. The accumulation of global external imbalances in today’s world should not be seen as a necessary precondition for the provision of global liquidity and the expansion of world trade.’ Consequently, even if a currency has a status as ‘reserve currency’, such as the US dollar or euro, that does not necessitate running a deficit (which then would be financed by issuance of US denominated debt).


Related Articles

Be the first to write a comment.

Leave a Reply