How much are we giving to Asia? Nothing, really

[eric144]

Whether the United States is doing enough financially to help the victims of the Asian earthquake and tidal wave is the subject of much debate around the world and at home.




President Bush's initial pledge of $15 million from the U.S. government was recognized as puny, and he quickly raised it to $350 million while asking his father, the former president, and former President Bill Clinton to help raise relief money from the public. This week relief money being raised by U.S. charities was estimated to be nearing $200 million. And then there is the enormous contribution of the U.S. military ships, helicopters, transport planes, and soldiers sent to the disaster area to rescue survivors and deliver relief. That will bring U.S. contributions to more than a billion dollars.

While this might seem pretty respectable and while the empathy of Americans cannot be doubted, U.S. financial efforts in Asian disaster relief are an illusion. For the United States has been for years now the biggest international debtor, borrowing for mere consumption, rather than capital growth, what is estimated at 80 percent of the world's annual savings. Indeed, just during the week of the Asian disaster, the Federal Reserve reported that foreign central banks purchased another $5.6 billion of U.S. government debt. That is, in just one week the United States took from the rest of the world more than five times as much as the country is likely to provide for Asian disaster relief.

It might be different if this debt was going to be repaid soon, but it will not be. U.S. debt has risen beyond any chance of repayment because the U.S. government and Americans generally have discovered that the world's reliance on the U.S. dollar as the only international reserve currency -- the currency in which most trade is conducted -- allows the United States to levy a huge tribute on the world. Foreign central banks have been buying U.S. government debt only to keep trade going and to avoid devaluation of their dollar reserves.

Even so, the rest of the world seems to be realizing that it may be possible to conduct international trade without paying such a heavy tax to the Americans. The European Union has issued its own currency, the euro, whose role in international trade is increasing, while there is talk of creating Asian and Islamic currency blocs. As the rest of the world starts moving away from the dollar, Americans will have to start pulling their own weight again. In any case, the only mathematically correct answer to how much the United States is contributing to Asian disaster relief is: nothing, really. For everything the United States is giving has been borrowed from foreigners.


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