NC State Ag Economist Dr. Mike Walden – “Are U.S. Investments Still Special?”


Mary:  This is Mary Walden with economist MW, welcoming you to the economic perspective.   Today’s program asks if U.S. investments are still special.   Mike, in most of modern history, but certainly since World War II, the U.S. economy has been dominant.  This in turn meant the U.S. dollar was dominant among international currencies.   How did this affect the financial world, and do these impacts still exist today?

Mike:  Summary Answer

  1. Since the world had great trust in the US dollar and in the US economy behind that dollar, it meant the US could borrow more cheaply than other countries
  2. Specifically, US government securities – like Treasury bills, notes, and bonds – did not have to pay as high of an interest rate
  3. However, this “specialness” of a lower interest rate – especially for longer term T-notes and bonds – has disappeared after the financial crash during the Great Recession
  4. In fact, in several recent years, US investments have had to pay more
  5. Analysts believe that what drove the change is not the Great Recession, but the frequent debates over extending the US debt limit – which if not met – can mean interest on some US Treasury investments could not be paid
  6. I’m MW

Mary:  And I’m Mary Walden for N C State Extension