Stephen Roach of Morgan Stanley recently wrote:
As long as the US can continue to pile up ever larger external deficits with impunity, why worry? Sadly, the New Math of a symbiotic sustainability is all smoke and mirrors -- it rests solely on the expectational underpinnings of a paper currency (the dollar) from a world that believes it can’t afford to bet the other way. Yet the Old Math of unsustainability -- the relatively straight-forward capitalization of the implied debt flows of large current account deficits -- will ultimately be the undoing of this pipe dream.
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