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Home Publications Blogs Beat the Press Washington Post Confuses Foreign Debt and Government Debt

Washington Post Confuses Foreign Debt and Government Debt

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Wednesday, 20 April 2011 05:00

In a front page article the Washington Post included an uncorrected comment from a random constituent of Representative David Schweikert asserting that if the government doesn't curb its borrowing that, "pretty soon foreign countries will be owning us."

Of course borrowing from abroad is determined by the trade deficit, not the budget deficit. The trade deficit is in turn determined largely by the value of the dollar. People who are concerned about foreign countries "owning us" should be yelling about the over-valued dollar, not the budget deficit.

The Post should not have printed this comment without correction. Many politicians and demagogues have attempted to exploit nationalistic and racist sentiments to push their agenda for deficit reduction. A responsible newspaper would not encourage this behavior.

Comments (5)Add Comment
...
written by izzatzo, April 20, 2011 5:40
Many politicians and demagogues have attempted to exploit nationalistic and racist sentiments to push their agenda for deficit reduction.


If the civil war was about state rights and not slavery why isn't financial slavery about the budget deficit and not the trade deficit?
..., Low-rated comment [Show]
Just Your Average Ordinary Salt-of-the-Earth Demagogue
written by Union Member, April 20, 2011 7:48

Perhaps this random constituent of Rep David Schweikert confuses the budget deficit from the trade deficit because they read The Washington Post.
Who Owns Who?
written by paul, April 20, 2011 7:54
If the U.S. dollar is reduced by 50% in value against the yuan, China loses 500 Billion dollars worth of wealth. China has a lot more to lose by "owning" us than we do by owing them.

As usual, the average American, who has NO economics education at all, is confused about national and international debts that are completely different from personal debts.
The debtors
written by NoMan, April 20, 2011 8:22
Actually, I bet this is what almost all investors believe. The US is going to depreciate the dollar, and though investors aren't happy about that, it's still the safe bet.

The other places for investment are Japan, which is in a bit of an economic pickle already and the nuclear devastation certainly hasn't helped. China doesn't allow free trade of their currency. You can put the money in the EU if you're willing to overlook that a large central bank controls all of the EU zone and is even more wonky than the US's policy.

You can invest in emerging countries, but you might worry about other attempts at investment like the East Asian Financial Crisis or the collapse of Argentina.

Despite all the ruckus, the US is still the safest place to put money, and that's why we don't have Greek style interest on bonds.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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