But if there is one thing that I would change about America if I could it's the propensity it has developed in the last ten years not only to live far beyond its means, but to see that as somehow a positive, normal thing.
In this context America is sucking money off of asian countries, albeit with their full cooperation, which technically makes America parasitical in this relationship.
As for money to do anything, yes, America seems to be handing out a lot of money in terms of buying the products of other nations. But when the money being spent is actually the money of the person being paid, I don't see how that can be thought of as being beneficial or responsible.
But the current situation is (according to people smarter than me) unprecedented--the American economy is getting an infusion of 3.5 billion dollars every day from outside the country in order to continue 'growing'. The average american has stopped living off of his productivity (his income) and has switched to living off his wealth (in general, credit based on the inflated value of his house, which he was able to pay for because of historically low interest rates, which, as you say, will need to rise if america wants people to keep buying dollars).
And again, I guess I just don't share your rosy view. I think that since Reagan's forced optimism of the 80's, and especially since the latest right wing, short sighted, pro business takeover, I think america has lost any rationality it might have had left regarding fiscal responsibility. Big economies can definitely have 'oh my god' kinds of things. I think the argument that 'it hasn't happened before' is pretty weak, indicitive of the current problems in the American model (the 'America is special' mentality), and simply avoids the discussion of how these things actually come to pass in the world.
And I don't feel "it hasn't happened before". I tried to say it better in a post to Jerome above. The UK had the US seigneurage position a long time ago, and lost it, as their economy soured. So it could happen. Maybe you could comment on that post, and see if we have a disagreement still.
US consumers and businesses have been buying their goods from and outsourcing their services to cheap currency countries, which has stopped what would have otherwise been a natural devaluation of the dollar. As a result, the US current account deficit is now pushing $US800 billion, $US300 billion higher than when, as research house Bridgewater Associates puts it, "private sector capital gave up on the dollar in 2002". It is also the biggest financing task the world has ever known.
The world has changed a lot since the pound lost its status as the world's currency, which correct me if I'm wrong happened around WWII, when the entire world economy was effectively shattered anyway. The rise of asia and the rest of the developing world, globalization...I don't think there's any comparison.
