The following is an email I wanted to send to a friend of mine in late 2004, but by mistake sent it to myself. There you go, the Freudian slip. But any way, here it is which I thought is relevant for the current times

• For the past 2-3 years, the US federal budget deficit is increasing and is at the level of 4% of GDP. Though the figure in percentage terms appears lower, in a $12 trillion economy its a lot. I think the US debt is at $22 trillion or some astronomical figure. 30% with Chinese & Japanese govts, 23% with foreign individuals. Any other economy or currency would have been dumped in a jiffy with this level of debt/deficit. The reason why it is going on so far is, because of the "faith" people have, in the "ability" of US to pay back.
  
  Once that faith is lost US bonds will be dumped like hot potatoes. History is witness to Argentine meltdown, East asia crisis that some small unpredictable event triggers the whole thing. When will the tipping point occur is a bet hard to take. If that happens the dollar will slide to something very low. To prevent it US has to take some or most of the following
  
  1. Reduce spending drastically. Some of the big ticket items are
  a. Military spending($440 billion). Not a good chance with the "war on terror" going on
  b. Social security, medicare benefits ($400 billion). There will be a revolution with the baby boomers retiring. Already its kinda hanging loose.
  c. Agricultural subsidies ($336 billion) all given mostly to the "red state" big farmers and agri corporations. Another political imponderable.
  
  2. Grow the economy and increase revenues
  Easier said than done. To offset the deficits US GDP has to grow at additional 4%
  Keeping up with the current rate of 3+/- .5 % itself is difficult, a 12 trillion economy growing at the rate of 7.5% is unimaginable.
  
  3. As a final option this seems comical but possible. Go to war with your creditors :)