US demand for funds would have pushed up bond rates, inflationary pressures would mean US monetary policy would be tighter, and the US Government would have difficulty funding its budget deficit. Businesses and households in the United States would face tougher monetary and fiscal policies and spending would be more restrained.
Despite higher US interest rates, the US dollar would probably be weaker because foreign demand for US assets would be lower. The US current account deficit would be smaller due to the weaker domestic demand and lower US dollar. It is not clear whether the world economy would be weaker or stronger.