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26 Feb, 2010 06:55

Offshore economy will not let US off its knees

According to Charlie Munger, long-time business partner of American investor Warren Buffett, the US economic empire is crumbling before our eyes, thanks to federal debt and poor planning.

Paul Craig Roberts, former assistant treasury secretary for President Reagan, told RT that Buffet’s partner focuses on long-term problems like national debt.

“US$60 trillion of unfunded liabilities is a problem, because Wall Street and the corporations have moved so many high productivity jobs offshore and with them the American technology,” reminded Roberts, “so that the economy lost the ability to create the kind of growth that would produce tax revenues that would make those “$60 trillion liabilities refundable.”

Paul Craig Roberts pointed out that, once the US moved a considerable part of its own gross domestic product overseas, it greatly affected the income of ordinary Americans and, therefore, their ability to buy products. This is the main reason why the stimulus program is still-born and the economy cannot restart.

“They do not address to what the problems are with the traditional remedies because so much of the American economy is offshore,” he concluded.

It is obvious that the short-term problem of the budget deficit will be resolved with commonplace money printing, went on the economist.

“When the rest of the world, the US creditors, perceives that, then the dollar status as reserve currency is in doubt and if the dollar goes, so does the American power.”