US's credit card.. hmm interesting?

Nations are like individuals, we produce and sell so that we can buy. If we buy too much
we have to borrow. If the U.S. imports, it can finance it by producing and exporting or by
borrowing through its capital account. At some point the U.S. will have to pay off its
credit card to the rest of the world.

I saw this on a Economics discussion board... nobody had any comments about it...

Thoughts anyone?

Answer:
Yes, we owe a huge amount to the rest of the world. There are 2 main possible "solutions".

1) We can produce more or consume less, and use the difference to pay off our debt. This would help other countries and hurt us. Since we currently consume about 108% of what we produce, we would have to cut consumption (or increase production) by more than 8% to even start to pay back other countries.

2) The dollar may drop a lot relative to other currencies.
This is sort of a "lose-lose" situation because it means that the other countries don't necessarily get paid back all the money that we borrowed, and yet we become poorer because we are less able to buy things (because the dollar is worth less).

Basically, we Americans have been very greedy and a little lazy and we have created a big problem for ourselves -- and it's going to hurt us (and maybe others, too).
That is probably because the U.S. doesn't own the goods it imports or exports. Those goods belong to individual people.

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