April 22, 2015
Former U.S. Treasury Secretary Lawrence Summers wrote on April 5 that this month may be remembered as the moment the United States lost its role as the underwriter of the global economic system. His comments refer to the circumstances surrounding China's launch of a new venture, the Asian Infrastructure Investment Bank (AIIB). Wary of China's growing ambitions and influence, the United States had advised its allies not to join the institution, but many signed up anyway. The debacle was undoubtedly embarrassing for Washington, but even so, Summers' prophecy is a bit premature at this stage.
Thus, the United States and the rest of the world have been locked in a symbiotic embrace for several decades, even as America's underlying fiscal position continues to deteriorate. But looking at its fiscal position alone misses the bigger picture.
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