The US has done it right: devaluation, deflation and defaultby Charles Dumas / August 21, 2014 / Leave a comment
Published in September issue of Prospect Magazine
Of the major world economies and regions, only the United States has largely fixed its financial system following the crisis. It has stabilised overall debt levels, private as well as government. Household debt is also well down from its peak, and monthly debt service payments are at the lowest level on record. Budget deficits soared in 2009, as the government injected capital into the economy to stop its collapse into depression, but have since been more than halved to below 6 per cent of output, and are falling still. Overall, the US government’s debt burden is stabilising at slightly less than its entire annual economic output. This is still too high, but better than in Spain, Portugal and Italy, where debt levels relative to output are still rising, as they are in Japan and China.