On June 15, the US government was given two fingers, not by a bunch of internationalist lefties, but by its main supporters, the international financial community. The US treasury tried to sell new US ten-year treasury bills worth $8 billion to plug the gap between what Americans spend and what Americans save. For the first time ever, foreigners said: ‘‘No thanks.” In doing so, foreign investors kicked off a process that has left the financial markets and the dollar in a tizzy. By taking up only 10 per cent of what the US government was trying to sell, investors have screamed: ‘‘The emperor has no clothes!” They are beginning to see through the Americans’ game. Since the beginning of the century, the US has been playing a big game of IOU with the rest of the world. Americans have been spending more than they are saving, and are asking the rest of the world to pay for the gap. In return, the US gives us a piece of paper which states that the American government will pay us back in 30 years.
From David McWilliams: