Status Updates From Dollar Trap, The: How The U...

the U.S. government partially defaulted on the war bonds it issued during World War I. Clearly, financial markets’ memory does not go back too far, and U.S. government bonds are now considered among the safest investments.

the dollar remains the preferred refuge from troubled financial markets, even if its home country is the source of those troubles. This seems a curious situation given the long-held view that the U.S. has relied on the generosity of foreign investors to finance its high consumption levels. The reliance on foreign capital ought to make the U.S. vulnerable rather than being seen as a haven of safety.