Many economists have long been expecting America's widening current-account deficit to cause a financial meltdown in the dollar and the bond market. The main reason why this has not happened (yet) is that emerging economies have been happy to finance that deficit. In 2005 this group of countries ran a combined current-account surplus of over $500 billion (see chart 14). A large chunk of that was invested in American Treasury securities, in what Ken Rogoff of Harvard University has called "the biggest foreign-aid programme in world history".
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