Is Trump right that America subsidises the world?

President Trump Credit: AP

Donald Trump's claim that the US subsidises the rest of the world to a massive extent by paying more into the international institutions that deliver peace and prosperity than others, should not go unchallenged.

Because arguably the US benefits more from a stable open global economy than other nations.

The point is that the dollar is the global currency in this interconnected world policed by the UN, the IMF, the World Bank and NATO, inter alia.

And this leading "reserve currency" status for the dollar allows America to borrow as much as it wants disproportionately cheaply from investors, central banks and businesses all over the world.

President Donald Trump signs his first executive order Credit: AP

What's more the US president's ambitious plans to give America an infrastructural makeover - with a trillion dollars of new roads, bridges, railways and so on - will mean that his government will need to borrow more and more cheaply than most of his predecessors.

Arguably it is foreign lenders - like the People's Republic of China and Japan, which are the US government's largest creditors - which subsidise America's cherished way of life, and have done for decades.

So bashing up China and Japan, as Trump has been doing, is not without risks for him, and the rest of us.

And if Trump puts America first to the extent that countries in general pull up the drawbridges and limit the free flow of goods, services and capital, the world will be poorer - and Americans will be much much poorer.

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