American federal deficits and its international economic effects

One of the critical issues facing the United States is whether federal deficits will have not only a deleterious effect on the U.S. economy but on the rest of the world economy as well. This paper focuses on how federal deficits have, in large part, been responsible for keeping interest rates high, which has resulted in creating economic conditions that could severely affect world economic growth. It will be argued that U.S. policymakers need to take into account how the world economy has become increasingly interdependent. This interdependence of the world economy will inevitably require a rethinking of present economic policies and how a new national strategy must be developed sensitive to this new reality.