Newspaper article THE JOURNAL RECORD

U.S. Must Get Used to Greater Foreign Influence

Newspaper article THE JOURNAL RECORD

U.S. Must Get Used to Greater Foreign Influence

Article excerpt

In much the way the United States influenced other countries in the past, it must now get used to a greater foreign influence in its own affairs, Edward F. McKelvey, vice president and senior economist with Goldman, Sachs & Co., said Thursday.

Speaking to the Oklahoma City Chamber of Commerce 1991 Economic Outlook Conference, McKelvey also said U.S. entry into the evolving European economy may be more difficult than it looks.

U.S. total trade, including imports and exports, is more than 30 percent of the country's total gross national product, McKelvey said. While that is roughly triple what it was 30 years ago, the United States remains one of the more closed, or isolated, countries around the world.

"The growth in debt that has occurred because of our persistent trade imbalance. . .suggests we are, in a financial sense, much more interested in what's going on abroad, and in foreign holding of U.S. assets," he said.

"We are now in hock to foreign countries for $600 billion, or 13 percent of our GNP (gross national product)," he said.

"We are saddling future generations with our obligation to pay debt."

Other countries have had to contend with this through much of their history, however, and have managed to turn it around, he said.

McKelvey said foreigners have a bigger influence on U.S. interest rates by whatever they're buying. When foreigners feel inclined to buy more, it helps to keep U.S. interest rates down, he said.

"It's clear that if we are to minimize a more complete control of our financial sector by foreign markets, we're going to have to reduce the trade deficit," he said.

McKelvey said one way to do so would be to cut the federal budget deficit.

What probably will happen is that the dollar should appreciate a little, which will entice more foreigners to invest here, which should help to relieve the deficit, he said. …

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