If the euro zone functioned normally, the United States would have a huge financing problem

From 1990 to 2013, there was a pact between the United States and China: the United States had a massive trade deficit with China, which China financed by accumulating foreign exchange reserves in dollars. It was good for both countries: the United States could consume more; China could produce more. But this pact broke down in 2014, which explains the tensions between the United States and China: the United States still has a huge external deficit with China, but China no longer finances it. Europe - in particular the euro zone and more accurately Germany - has now replaced China in the financing of the US external deficit. But instead of being the fruit of a pact between the United States and the euro zone, this results from an anomaly in the functioning of the euro zone. Since 2012, Germany and the Netherlands have refused to lend their surplus savings to the other euro-zone countries, as they had since the creation of the euro, and now lend them to the rest of the world, in particular the United States. If the functioning of the euro zone returned to normal, the return of confidence between the euro-zone countries would restore capital mobility between the m : Germany’s and the Netherlands’ excess savings would be lent again within the euro zone, which would trigger a drastic financing crisis for the United States, requiring a recession to eliminate its external deficit.