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By John Plender
Published: June 15 2010 16:22 | Last updated: June 15 2010 16:22
There is an equal and opposite formulation to Keynes's maxim "?in the long run we are all dead'. It is that the long run ultimately catches up with all fiscal profligates. Yet this rule, which has stood the test of history, appears to have been suspended for the benefit of the world's unique superpower. Likewise for the world's greatest currency brand name, the dollar.
The US has been conspicuous in its failure to set out a credible medium term strategy to address a huge budget deficit. It continues to espouse loose fiscal and monetary policy, which is traditionally a recipe for a weak currency. Yet the dollar, in the midst of Europe's sovereign debt crisis, remains strong. The reason is that there is no realistic alternative for the world's excess savers in northern Europe and Asia, who are piling up official reserves.
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