Martin Wolf does a fine job explaining how various global imbalances interact and how one country trying to address its imbalances may have consequences for others, perhaps especially the US because its economy, and imbalances, are so big (“Why global imbalances do matter”, Opinion, June 24).

Among the biggest of these imbalances is the global savings surplus and the US federal deficit, which, at this point, rather balance each other out. The question is, if the US actually reduced its fiscal deficit, what would happen to those with savings surpluses.

While that may be a concern, I think the market could address the problem as long as the US’s fiscal deficit decreased slowly. The bigger issue is what would happen if those with savings surpluses decide that they no longer feel comfortable financing the US fiscal deficit at a reasonable cost — or indeed at any cost. Which is, of course, the biggest risk — both for the US and for its creditors.

It is also the biggest risk because, even in today’s hyper-partisan politics, the one thing almost all Americans agree on is that they want the government to do more than they are willing to pay for.

Republicans want tax cuts, but they don’t want the government to do less, except for “de minimis” things like foreign aid. Democrats, on the other hand, want to increase all kinds of social programmes, but they somehow think this can be paid for by increasing taxes on “the rich”, ie on other people.

If economist Herb Stein’s law — “If something cannot go on forever, it will stop” — is right, then one of two things must happen. Either some political leader will have to convince the American people that they need to actually pay for the government they want. Or there will be a debt crisis that would make the Eurozone crisis of the early 2010s look like a little blip.

Unfortunately, I fear the latter may be more likely than the former. I just have no idea when it will happen.

Patrick J Allen
River Forest, IL, US