The 'AAA' rating of the US rests on the position of the US dollar as a key international currency. Without this status, the US would not have such ready access to external financing interest rates would have to rise to attract higher domestic savings growth would slow well below potential.
The US dollar did not attain this position by accident, however, nor is it simply maintained by inertia. It derives from the fundamental strength of the US economy - the causality does not run in the other direction. That strength derives from the size of the economy, the flexibility of labor and product markets, and - relative to other large developed...
