This is serious, but not as serious as the author portrays.
Every country that ran a current account deficit like the US, has had their economy blow up in their face.
However, the US is very unlike the other blow ups in that those countries had CA deficits because no one wanted to buy their stuff. The US has a CA deficit because everyone wants to invest here.
from the article "in part, the current account predicament is a reflection of the fact that the United States sits at the center of an "international financial system where its assets have been in high demand."
What happened in other countries is their economies stalled (usually via too much govt. boondoggles and welfare spending), then they borrow money in US dollars to import goods the economy no longer produces, then the currency crashes but the foreign debt is denominated in dollars so suddenly, they owe money that can not be repaid because their money is worthless. The end result is they have no dollars, no one wants their worthless paper, they can't import which means vital goods are no longer available and that is the ugly end.
This will not happen in the US because the US is a huge economy so things will happen slower. Inject a mouse with poison and it dies, do the same with an elephant and it dies very slowly. This will allow the US time to correct the problems. Also, the US foreign debt is in dollars and not someone elses money. So if our currency crashes, we can still repay in dollars.
This will end badly for the US as the only way out of a CA deficit is to produce more and import less which is the same as working more and getting to spend less. But it will not likely be anything like what happened to other countries with a similar problem.
"the only way out of a CA deficit is to produce more and import less which is the same as working more and getting to spend less."
Hmmmm... Which is one reason you'd think that our government would be all over alternative energy sources. If we eliminate a good portion of our dependence on foreign oil, and suddenly our trade deficit isn't as daunting. That's like a 30-35% reduction right there.
This will end badly for the US as the only way out of a CA deficit is to produce more and import less which is the same as working more and getting to spend less.
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That is exactly what has been happening to me for several years 8 0 )