BRICS And BRACs

Behold the great illusionists of the federal government: they pull money out of thin air. They make red ink disappear before your eyes. And if you listen to their chatty patter and don’t watch too closely, you will think the American dollar is still sturdy as stone.

But the strength of the dollar – the world’s reserve currency and thus a source of power and wealth for the United States – is a matter of perception. It depends on the world’s investors trusting that America is secure and well managed and, above all, that we always pay our debts in full and on time. It also depends on there being no viable serious global competition for the dollar.