Rickety Economic Theory
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That rattling you perceive in “A Shaky Economic House of Cards,” the Sept. 10 Times Board of Economists column by David M. Gordon, is due more to rickety economic theory than the country’s quaking financial condition.
After cataloguing our national debt, he warns that fearful foreign creditors “could begin to pull out their money at a moment’s notice.” Well now, Mr. Gordon, just how does one do that?
Imagine yourself a foreigner with a $1,000 U.S. Treasury Bill. You decide to “pull out.” You could cash in the bill at maturity and get U.S. dollars, you could sell it and buy something in the United States, you might exchange it for other currencies as long as the supply lasts, or you might use it to buy something in a foreign country, in which case some other foreigner holds it instead of you.
None of these things have much effect on Americans. The “pullout,” which you make sound about as pleasant as a root canal, is simply not an option. As long as foreigners accept dollars for their Toyotas and what-nots, they are stuck with dollars that can be used only in America to buy our goods, invest in our industries or finance our debt.
JAMES E. KRISTY
Buena Park
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