WASHINGTON Nov 14, 2005 — Foreign investors will likely tire of bankrolling the bloated U.S. trade deficit but the economy's flexibility should help temper any fallout, Federal Reserve Chairman Alan Greenspan said Monday.
Greenspan's remarks delivered via video link to a conference in Mexico referred to the broadest measure of U.S. trade called the current account deficit, which swelled to a record $668 billion last year. The shortfall is financed mostly by foreign investors.
Of course, almost everyone knows that shipping over half a billion dollard overseas, year after year, will eventually have a less than desirable impact. The fact that some, like Greenspan, seem to think being indebted to foreign governments is a good ideas is a little harder to understand.