At the outbreak of the First World War, investors sold dollars and bought sterling. It ought to have been the reverse, since Britain had declared war and the US was standing apart. But crowds rush to safety in a crisis — and sterling was then the reserve currency. Little did they guess that sterling would be undone by war debt. Markets reacted the same way after the 2008 Lehman Brothers collapse. Although the crisis began on Wall Street, the dollar rose; America was rewarded for its sins. But profligacy cannot go on indefinitely. By his actions, Donald Trump is bringing forward the dollar’s reckoning. The US president’s most tangible effect is on public debt. If Trump’s tax cuts do not expire, as they are meant to within a decade, US sovereign debt will rise from 77% of GDP today to 105% by the end of 2028. That would roughly equal its highest level in history, which was during the Second World War. By comparison, Italy’s debt is 131% of GDP. Under current law, which is what the Con...

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