rupert-owned ny post re: us financial architecture

Over the past year, foreigners have taken $214 billion worth of their assets out of the United States.

That figure is proving to be extremely troubling to the Federal Reserve, I'm told by a highly reliable source with close ties to that organization. In fact, the trend is so worrisome that none of the other considerations may matter as the Fed gets closer to its May 6 meeting on interest rates.

Hold your nose; here's a brief economics lesson. The first thing you need to understand is that the U.S. needs all that foreign money. With federal debt at $6.5 trillion and our country running annual deficits, foreigners essentially pay our bills.

They buy huge amounts of our government's securities. They help prop up our stock market. And they, more than the Fed, keep interest rates at the low levels we've come to enjoy and need.

If foreigners didn't loan money to Washington - by purchasing government securities - then our government would have to pay higher rates to attract the additional money from American investors.

The final straw for foreigners would be signs that the United States is being fiscally irresponsible.

You probably haven't noticed, but a number of Fed officials have come out lately and hinted that there are alternatives to cutting interest rates - like pumping money directly into the banking system.

And you may have also missed last week's vehement opposition to new tax cuts to stimulate the economy, which came from a group of highly prominent and respected former politicians and Wall Streeters.

The idea here is the same: force Washington to be fiscally responsible, not increase the budget deficit with a tax cut at the same time the war bills are piling up. Don't send foreigners running.

if the fetish/belief system of the u.s. dollar collapses, hallelujah