Dr. Susmit Kumar

United States is considered to be the Mecca of capitalism. Americans claim European countries to have socialist economy. Let us see what some US economists say about the present economic condition in the US.

According to economist Allan H. Meltzer at Carnegie Mellon University: [1]

“We [US] get cheap goods in exchange for pieces of paper, which we can print at a great rate.”

However, the mountain of U.S. bonds foreigners are accumulating means the country is going deeper into debt to fund its import binge. According to William R. Cline, a scholar at the Institute for International Economics: [2]

“Sooner or later, the rest of the world will decide that the U.S. is no longer a safe bet for lending more money.”

According to Brad Setser, an economist with Roubini Global Economics, LLC, in New York, in order to pay for its imports the U.S. needs to attract foreign capital at the rate of about $20 billion a week [i.e. to finance $1 trillion dollar twin deficit a year, consisting of a $700 billion trade deficit and a $300 billion budget deficit]. This is equal to selling three companies the size of the maritime firm that was supposed to be purchased by Dubai Ports World.[3]

Peter Morici, a professor at the University of Maryland’s business school in College Park, says: [4]

“We are basically selling off the furniture to pay for Thanksgiving dinner.”

According to him, foreigners could own within the next decade more than a fifth of the nation’s total $35 trillion or so in assets of every kind – corporations, businesses and real estate.[5]

According to Lou Crandall, chief economist at Wrightson ICAP, which analyzes Treasury financing trends: [6]

“While the current market for [US] Treasuries is booming, it’s unclear whether demand for debt can be sustained. There’s a time bomb somewhere, but we don’t know exactly where on the calendar it’s planted.”

Therefore it is wrong to claim that capitalism has been successful in the US. If a person needs $3 billion every day to run his family, then he cannot claim himself to be a successful businessman.

1 Blustein, Paul, “U.S. Trade Deficit Hangs In a Delicate Imbalance,” Washington Post, November 19, 2005.

2 Ibid.

3 Blustein, Paul, “Mideast Investment up in U.S.,” The Washington Post, March 7, 2006.

4 Fracis, David R., “The U.S. is for Sale – and Foreign Investors are Buying,” The Christian Science Monitor, June 9, 2008.

5 Ibid.

6 Montgomery, Lori, “U.S. Debt Expected To Soar This Year,” Washington Post, January 3, 2009.