Harvard Magazine has a good article up online called Debtor Nation. The four pages give an overview of the current situation with the US economy and currency and its dependence on debt.
The global imbalances created by this dynamic of American borrowing and foreign lending appear stable for now, but if they slip suddenly, that could pose serious dangers for middle- and working-class Americans through soaring interest rates, a crash in the housing market, and sharply higher prices for anything no longer made domestically.
“We are at full employment, maybe more than full employment.†Furthermore, he notes, we have large liabilities ahead of us associated with an aging workforce, due not so much to Social Security as to the rising healthcare costs covered by Medicare. “There is absolutely no excuse to be running a government deficit of even 2 percent in the federal account, as we are doing now, when we are at full employment and the retirement of the baby-boom generation is right around the cornerâ€