This research examines the external deficit of the United States (US). The world's press provides a continuing stream of reports relative to the external debt of developing countries. Little has been reported, however, on (1) the emergence of the US as a debtor nation in 1985 (Rubenstein, 1988, p. 14), (2) the growth of the external deficit of the US in 1986 to the point where the US had (and continues to have) the largest external deficit of any country (Nussbaum, 1987, pp. 160-161, 163), and (3) the potential for the US external deficit to either equal or exceed that of all other countries combined by some point in the early 1990s (Nasar, 1988, pp. 77-79).
The findings of this research are presented in three separate discussions. In the first of these discussions, the problem is identified, and its character is defined. The second discussion considers the origins and development of the problem. Lastly, the third discussion considers the resolution of the problem.
THE PROBLEM: IDENTIFICATION & CHARACTER
An external deficit develops for a country when the claims of foreign entities on the country's economy exceed the claims of that country on the economies of other countries. As recently as 1984, the US was a creditor nation, with claims against foreign economies (US$896.1 billion) just exceeding foreign claims on the American economy (US$892.6 billion) (International Monetary Fund [IMF] "International", 1989, p. 410). In 1985, the US slipped into debtor status, with claims against others (US$950.3 billion) more than offset by claims against its own economy (US$1.061 trillion) (IMF "International", p. 410).
Since 1985, the external deficit of the US has been growing rapidly: from US$110.7 billion in 1985, to US$269.2 billion in 1986, to US$368.2 billion in 1987, to an estimated US$473.3 billion in 1988 (IMF "International", 1989, p. 410; Council of Economic Advisors [CEA] "Economic Indicators", 1...