USA Economy

The prospects for the dollar are acting as a thermometer that indicates that something (or things), is not working well in the American economy. This situation is worrying for the world economy by committed interests. China, one of the most committed countries, owns assets of US $750,000 million, and when it is increasing diversification of reserves, this is not viable since it would remove him funding to the current deficit of the US economy, further deepening the weakening of the dollar and therefore increasing the loss of value of the reserves Chinese. The solution for China to this dilemma does not depend on China, but what does USA. And USA can not stay without doing anything and keep the autopilot of the deficit financed by China. This situation is already untenable.

And the road that runs through the U.S. economy finds its bifurcation: or what more quickly as possible goes toward a severe fiscal discipline or toward a new crisis. In this context is that China came to negotiate with the US (was already time for make it), while the rest of the world is It maintains expectant. And China is disguised as pseudo IMF and brings tranquility to the Obama Government to confirm its support for efforts to revive the economy. This translated means that China will maintain its demand for American assets. But like good pseudo IMF, the Chinese authorities have expressed concern over the American fiscal meltdown. Given this Geithner acknowledged that the fiscal creature has behavior problems but promised, they apply the most strict discipline as soon as possible.

And as proof of that commitment, Geithner recalled that USA maintains its objectives of strong dollar and low inflation, though that currently observed may be inconsistent with those objectives. Not only China presses to U.S. discipline its fiscal policy, but so does Bernanke fearful of being found responsible by the next crisis (current monetary policy of the FED would collaborate with it). In this sense, Bernanke said before the Budget Committee of the House of representatives: maintain the confidence of the financial markets requires that () begin to plan to restore fiscal balance.And when still not just out of the current crisis, everyone prepared for the next crisis, which still can be avoided if U.S. discipline quickly and China press and collaborates with its exchange-rate policy (be encouraged?) to make us. They will be arranged both economies to cede us with a larger adjustment of the desired and China appreciating strong currency to achieve the common goal?


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