The United States needs a region with a large savings surplus as a counterparty

The United States has long had a shortfall in domestic savings relative to investment needs. In order for this situation to last, there must be a region that has a savings surplus which it lends to the United States. This arrangement can be mutually beneficial : the United States can finance additional consumption and investment, the lending country has access to a risk-free financial asset (US Treasuries ) and can sell more goods and services in the United States. Traditionally, it was by China, Japan and oil-producing countries that played this lending country role . But these three countries (regions) are now no longer lending to the United States, and it is mainly the euro zone that plays the lending country role . But it is possible that the euro zone will stop playing this role of key lender to the United States: The yield on US Treasury debt will remain very low for a long time; The national and European recovery plans will absorb Europeans' savings in Europe, which will no longer be available to invest in the United States. If the United States no longer has a lending country as a counterparty in the future, it will have to eliminate its external deficit, which will inevitably lead to a marked contraction in domestic demand and a sharp depreciation of the dollar.