This article talks about how the United States spending deficit has risen to about 5 percentage points of its GDP and how that effects emerging markets who borrow from other countries. Because of its high deficit the United States has "the loosest fiscal stance of any of the G-7 countries." With either extremely low interest rates or negative interest rates in Europe, Japan, and South Korea, the United States is extremely attractive to foreign investors. This will end up hurting emerging markets who use the USD to denominate their debts because as the dollar strengthens, the burden of paying the debt back in these emerging markets increases. Two countries that are particularly effected are Argentina and Turkey. Neither country are good savers, they both have consistent relatively high inflation, do not export a lot of goods, and borrow from the world in dollars.
This article directly correlates to the class because we have talked about how exchange rates matter to debts. In the last lesson when we talked about the exchange rate of Rubles to Dollars, the weakening Ruble in relation to the Dollar made it more expensive to repay debts that were denominated in dollars. The same is true of these emerging markets who primarily borrow in dollars.