Excellent Article in the WSJ on the Dangers of the Federal Deficit

This is not a new message, however, this article puts the issues front and center:

Seib, Gerald F., 2011. As budget battle rages on, a quiet cancer grows. The Wall Street Journal, Mar. 8.

For a long time, I have been concerned regarding the trade and budget deficits. In various ways, these have become structural and are draining resources from the US at an alarming rate.

In countries like Japan, most of the government bond purchases are by citizens. Interest payments stay in the country.

In the US, perhaps as much as 60% of Fed Bonds are purchased by overseas governments. Hence, interest payments on American debt moves overseas, taking money out of the economy.

From the article,

"A recent study of the debt sponsored by the National Academy of Sciences cites one credible projection that, by 2030, the U.S. could be transferring 7% of its entire economic output, or $2.5 trillion, to foreigners every year to service its debt."

Given what appears to be a situation of structural low economic growth in the wake of the Financial Crisis of 2008, the only salvation of Federal budget cuts beginning with FY2011.

Everyone needs to work together to turn this situation around for the benefit of America.