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America’s Weakness Might Be Its Greatest Strength


America’s Weakness Might Be Its Greatest Strength

One of the most common criticisms leveled against the United States is that it is a debtor nation. The amount of money measured in U.S. Treasury notes, that the United States owes to the rest of the world, runs into the trillions. In fact, the Chinese own several trillions of dollars worth of American debt. Based on this fact, the logical conclusion to draw is that: the United States is essentially bankrolling its lifestyle at the expense of the rest of the world’s purchasing power.
US Treasury Department Building in Washington DC

US Treasury Department Building in Washington DC

A lot of the U.S. Federal Reserve’s critics constantly point back to this fact. The United States is no longer a net producer. It is the largest consumption-driven economy. There have been a lot of hand-wringing regarding this fact. A lot of economists are saying that these negatively impact the United States, and that the U.S. should go back to producing.

Well, considering the fact that the United States is poised to register another positive year of GDP growth in 2015, there is a lot to be said for the present shape of the U.S. economy. While it is true that the U.S. economy is geared more towards consumption, this fact has prevented the U.S. from being dragged down by the global economic slowdown. Everywhere else – from China to Europe to Japan to Australia to Canada – our export-driven trading partners are showing signs of economic slowdown or outright recession. This is not happening in the United States.
The main reason why – the global economic recession hasn’t hit U.S. shores – is that over 75% of U.S. economic activity takes place within the United States. This powerful consumer-driven orientation is actually insulating the United States from the normal effects of a global economic slowdown. Now, if the United States were more of an export-driven economy, then it would be dragged down with the rest of its trading partners. This is not happening.
It appears that the main fault and structural weakness – that critics of U.S. economic policy like to point to in their arguments against U.S. policies – is actually the U.S.’s greatest strength. How long the U.S. can keep the global economic slowdown at bay is another question entirely. However, for the short-term, as well as the midterm, things are looking bright for the American economy.


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