by Mel Stride, Conservative MP

for Central Devon

Sunset on America

Congress finally took the decision to raise the US debt ceiling, allowing her to borrow more.

The consequences of not doing so would have been jaw-dropping. The US government would have run out of money. Its credit rating would have been downgraded by all credit agencies (not just S & P), meaning a loss of confidence in the dollar and an increase in her borrowing costs. A return to recession would follow.

But something more fundamental would have happened — the USA's position as world top dog would have been tarnished overnight.

Almost any other country as over-borrowed as America would have already suffered this fate. It is the brand 'USA', acquired in the last century, that has spared her to-date.

But what of the future? My view is that she will effectively default on her indebtedness through increased inflation that will see the dollar fall and debts diminished in real terms.

This alchemy bears its own challenges, of course, and one thing is for sure — the long haul back to financial probity will be long and painful.

Keynes once famously said that in the long run we are all dead. That may be America's metaphorical destination, as no matter how you pull the macro-economic levers — no matter how powerful you are — you cannot resist the inexorable tide of the most basic economic law, that being that if you produce more efficiently than others you destroy them.

And if you manage this on a global scale not just for basic manufactures but for higher value-added goods and services too, then global pre-eminence ultimately follows.

On that test America is watching the sun set on her remarkable history — just as after the Great War that same sun dipped on ourselves and Empire. That sun now rises in the East.