1. David Lazarus says

    Most of Americas problems are home grown. Tax policy that makes it cost effective to offshore jobs only accelerates the problems.

  2. john says

    “What Valéry Giscard d’Estaing called the “exorbitant privilege” of the world’s reserve currency” I would call The Accidental Marshal Plan. By untethering the dollar from gold in 1971 but leaving the obsolete gold standard bond regime in place repurposed as an interest rate management tool we have left ourselves open to 87 Accidental Marshal Plans imposed on us by trading partners who choose to suppress domestic wages for their own local purposes and centrally accrue the value of the wage suppression in dollar bond holdings. All of these trading partners are more authoritarian than we and all use the amassed wealth of wage suppression and export earnings to entrench local elites. If we quit selling bonds and used a supporting rate on reserves as the main tool to manage our interest rates, our trading partners would loose the ability to force their imports into our markets.

    1. David Lazarus says

      Rubbish. Of the top 9 countries with which the US has the largest deficits in August 2011 only China could be described as authoritarian, and that was second to Canada. The others are Mexico, Japan, Germany, UK, South Korea, Brazil Taiwan and Netherlands. None of which could be described as authoritarian. The UK may have a surplus with the US but has a deficit overall with the rest of the world.

  3. tyaresun says

    Let the Fed move away from ZIRP and savings rate will go up.

    1. David Lazarus says

      It will also help deflate what remains of any property bubble.

  4. Septeus7 says

    How many of these trade deficits are due to Oil Importation or other raw material importation?

    I don’t believe that all deficits are the same. A raw materials import means that you are adding valuing without the cost extraction which is a net grain. While the accounting would show a deficit in trade the total value of the economy create would offset the loss.

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