It sometimes used to be said that American farmers were far better at farming Washington than at farming. That comment stung because it had a grain of truth. The scale of US agricultural subsidies is now dwarfed by the subsidies that Beijing, Moscow, Brasilia, New Delhi and others offer to parts of the US financial sector.
Setser calculates that the BRICs – Brazil, Russia, India and China – are on track to accumulate a further $800 billion in reserves this year. Here’s how he breaks down the impact of that on the US economy: “If 65% of the BRICs combined $800b reserve growth is flowing into dollars and the BRIC currencies are on average undervalued by 25% against the dollar, the BRIC taxpayers are subsidizing the US to the tune of roughly $130b a year. That is roughly 1% of US GDP.”
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