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Comparing the debt of the U.S. to the debt of Portugal, Ireland, Greece and Spain is like comparing the basketball skills of LeBron James to mine. These countries have virtually no control over the currency they use. They cannot set interest rates or buy debt or even devalue their currency to help their trade imbalance. On the other hand we, the USA, control the world s most powerful currency. Our debt is denominated in the greenbacks that we issue.
Most of our debt is owed to our own citizens. But what about all that money we owe China? The debt to China has nothing to do with budget deficits and everything to do with trade deficits. Our consumers choose to buy more from China then China buys from us. China takes the money that we paid for the cheap goods we bought at Walmart and they invest that money in the world s safest asset. That s right, U.S. Treasury bonds.
Under President Reagan, the debt grew more than twice as fast as it has under Obama. The average rate of inflation in the postwar years has been 3.6 percent. Under Reagan it was 4.7 percent. Inflation under Obama has averaged 1.6 percent. Where s all the inflation that the experts said would debase the dollar?
Five-year Treasury yields, when you count inflation, are negative. The world pays the U.S. to borrow.
What does matter is our productivity. Education and infrastructure are what matter. Invest to increase productivity. Employ productive Americans and the debt will take care of itself.
BRIAN KEANE, Upper Allen Twp.
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