Consumption the other side of debt.

“American consumption has been the principle engine of economic growth in the world over the past decade,” says the NY Times, and in the porcess the United States has become the world’s biggest debtor.

We have been buying so many foreign goods that the difference between what we buy and what we sell had grown wider and wider. To pay for the difference, we borrow, mostly from foreigners, notably the Chinese and Japanese.

China loans us money and we use it to buy cheap goods. This helps their economy grow and other spending helps other economies to grow, and so on.

Seems like a good formula until you thinkg about the fact that it cannot go on indefinitely. Somehow, some way, sometime, it has to stop. And then we have to pay down that debt.

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