Greenspan says US deficit cannot grow forever [View All]

[Judi Lynn]

Greenspan says US deficit cannot grow forever
November 15, 2005

Washington - Federal Reserve chief Alan Greenspan said on Monday the huge US current account deficit cannot expand forever as foreigners will one day tire of financing it.

But in a speech to the Bank of Mexico, he said the US economy should be able to weather the adjustment provided it stays flexible.

Greenspan noted that thus far, the United States has experienced little difficulty in obtaining the foreign investment needed to finance a deficit running at more than six percent of gross domestic product.

But the deficit "cannot persist indefinitely", he said, as investors are likely to grow alarmed about the country's ability to pay its external debts as the trade and capital account shortfall expands further.
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