Americans have been good at making assumptions–housing prices would continue to spiral, Fannie and Freddie would never need a government backstop, borrowing increasingly more would never come back to haunt us, and our major investment banks-managed by financial geniuses– were impervious. One by one, our assumptions have been knocked down.

Politicians and bankers have also posited that international investors would always continue to invest in Treasury bills and U.S. companies, because American is a safe haven and the most powerful economy on earth. We could afford to run up our national  debt–now over $10 trillion– and  our federal deficits–this year $400 billion plus and about to balloon, because the rest of the world would keep pumping money into us even when we lower interest rates to overcome economic weakness. The fail safe assumption is they have so much invested, they would only hurt themselves if they stopped banking on us.

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