lunes, 25 de julio de 2011

Why the debt is not a problem for the United States? An answer in 150 words (II)

The debt is not a problem for the United States, because the United States is the owner and issuer of the international currency for the commercial and financial transactions, and, moreover, the currency in which the central banks of the world maintains their international reserves.


But, the essence of the issue is that while for the rest of the countries their financial international commitments are external debts, for the United States their financial international commitments are internal debt, because it is a debt in its own currency. The difference between external debt and internal debt is that the former is denominated in international means of payment (U.S. $), while the second is denominated in national currency of each country.

The fact that its debt is considered internal debt and not external debt is the big advantage of the United States, because the U.S. has sovereign capacity to issue U.S. dollars, without limitations.

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