The Dollar Nosedive: Why America's Currency Is the World's Problem - 3 - International - SPIEGEL ONLINE - News

The Dollar Nosedive: Why America's Currency Is the World's Problem - 3 - International - SPIEGEL ONLINE - News

While Asia finances America's excessive consumer spending, the Americans buy Asia's cheap T-shirts, cars and flat-screen TVs. "Getting this much into debt while at the same time enjoying returns on long-term government bonds of less than 5 percent -- I'd call it the biggest free lunch in modern economic history," says Harvard historian Niall Ferguson, referring to the audacity with which the Americans take advantage of their privileges as holders of the world's reserve currency.

Rarely has the world economy been so out of whack or have global imbalances been greater. The Americans were the world's financiers for years. Today they are its biggest borrowers, while the Asians serve as America's bank.

It's obvious that this does not bode well for the long term. For years, economists and politicians have been warning against an impending crash. Now it seems that the time is ripe for this to happen.