The loss of American independence

In 1956, the British and French governments defied the wishes of the U.S. government by invading Egypt and taking over the Suez Canal.  President Eisenhower forced them to stop by threatening to sell the U.S. government’s holdings of Pound Sterling bonds, which would have crashed the value of the British pound and brought about an economic depression.

Now the United States government will soon be in a position, and may already be in a position, where the Chinese government could order us out of Afghanistan, or tell us to keep hands off Taiwan, simply by threatening to sell their U.S. Treasury bonds, thereby crashing the dollar and the U.S. economy along with it.

The weak U.S. position is not so much due to the U.S. government budget deficit as to the overall U.S. trade deficit with the world.  It would not be so bad if we were borrowing from foreigners in order to build factories and create new businesses and industries, but our borrowing is to finance current consumption. What we need to be thinking about as a nation is how we can produce more for our own needs and to export.  We can’t downsize our way to prosperity.

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One Response to “The loss of American independence”

  1. philebersole Says:

    For some historical figures and also some more up to figures on the U.S. trade deficit, click on this link, then click on the bottom of the two maps, then click on IMF World Economic Data Base, April 2009.

    For some reason I can’t link to this directly.


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