EdwardBaiamonte
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- Nov 23, 2011
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The balance of trade is only one side of the larger balance of payments that is so frequently ignored by mainstream economists.
There is a balance between the capital account and the current account, the latter being called the balance of trade. If there is a deficit in the current account (trade deficit) there will be an equally large surplus in the capital account (investment into the country). And that is the case. Foreign countries invest more money in the US than we invest in them. Unfortunately, much of that investment is in US government bonds.
For every trade deficit, there is a capital surplus. Don't forget the other side of the equation.
Imagine if we had passed the Republican Balanced Budget Amendment so the Chinese and Japanese had to buy our products rather than our debt.
It is liberals who create the trade deficit, really!