Wal-Mart distracted me from taking note of the gargantuan trade deficit numbers that came out: last year, the U.S. had a $666 billion trade deficit, an all-time record. Most people have been shrugging off the trade deficit, or maybe they basically don’t care what with the housing bubble making a lot of people feel like they are building wealth. But, part of the problem is that this trade gap is being financed by foreigners, particularly Asian countries, who are trying to keep the value of the dollar up—because that makes imports into the U.S. cheaper.

As the Economic Policy Institute points out:

The current U.S. international debt path is damaging to future U.S. living standards. This damage has not materialized yet because interest rates have been at historic lows in recent years, making U.S. borrowing extraordinarily cheap.

This can’t go on forever. Eventually, the Federal Reserve is going to hike interest rates to a point where the damage is much more clear. It won’t be pretty.