The Impossible Budget Deficit Essay Example for Free

The Impossible Budget Deficit Essay In his article, â€Å"Trouble, Trouble, Debt, and Bubble,† Tabb (2006) writes that the United States is importing far more than it is exporting.   The high consumption of the United States is due mainly to the reason that the rich people of the country must maintain their upper class status and high standards of living.   But the country is not earning enough to support its expenditure.   At one time or another, the United States would also become unable to pay the interest on the foreign debt that it is using today to maintain its high consumption.    The country may become bankrupt at such time, and the rest of the world would suffer because it would not have the United States to buy its goods.   Ã‚  Ã‚  Ã‚   While the author’s analysis makes sense, I would not blame the upper class consumer in particular for maintaining high consumption.   I believe that the capitalist or the industry of the United States is equally responsible.   The author also mentions the relation of the U.S. dollar’s value to the global economy.   A decrease in the demand for U.S. dollars can lead to a depreciation of the value of the currency with respect to another country’s currency.   Indeed, the fall of the U.S. dollar would turn out to be a curse for the global economy, although it may benefit the U.S. economy for some time (Tabb).    By making U.S. exports cheaper to other countries, it would increase the aggregate demand for U.S. goods which would in turn give the United States the income that it needs to fuel high consumption.   The United States can hope to reduce its current account deficit and trade deficit through the decline of the dollar, for it is obvious that making U.S. goods and services cheaper to foreign importers may very well increase the aggregate demand of U.S. goods and services, thereby fueling the growth of the U.S. economy.   Still, the benefits to the U.S. economy may eventually be offset by a fall in the aggregate supply of foreign goods into the U.S. market, seeing as foreign nations would stand to lose by selling to the U.S. consumer market and facing a reduced dollar value in return.   Ã‚  Ã‚  Ã‚   Tabb does not offer real solutions to the problem that the U.S. economy is facing at present.   All the same, it is obvious that the entire global economy is in danger because of the troubles facing the United States economy.   Thus, Tabb’s article offers food for serious thought.   It is mind-boggling, yet essential to reflect on. References Tabb, W. T. (2006). â€Å"Trouble, Trouble, Debt, and Bubble.† Monthly Review, Vol. 58, Number 1. Retrieved Nov 25, 2007 from http://www.monthlyreview.org/0506tabb.htm.