The looming crisis in international payments

The US current account deficit of 5% of US GDP is too large to be sustainable; US net external liabilities are increasing too rapidly relative to US GDP. The US international payments position conforms to the pattern of Ponzi finance as Americans obtain the money to pay the interest and dividends to the foreign creditors from the foreign creditors.

The US external payments position today is comparable to the payments position of Mexico in 1994. In both cases the movement to a non-sustainable pos

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