Answer :
Final answer:
The detailed answer discusses foreign ownership of U.S. bonds, differences between gold standard and floating currencies, and the possibility of deficits on both current and capital accounts.
Explanation:
Foreign ownership of U.S. bonds: The editorial raises concerns about the impact of foreign ownership of U.S. bonds on the trade deficit and future generations' standard of living. While foreign ownership of businesses and land might differ, the editorial highlights potential repercussions of heavy bond ownership on the U.S. economy.
Gold standard vs. floating currency: A currency tied to gold has a fixed value, unlike a floating currency whose value fluctuates. If foreigners cashed in dollars today, the U.S. would feel the impact as it might face a devaluation of its currency and potentially lose reserves.
Deficit on current and capital account: Yes, a country can have deficits on both accounts simultaneously. A current account measures trade balance while a capital account tracks investment flows, so deficits on both accounts are possible based on different economic activities.
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