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Category: US Trade Deficit

This category includes articles that discuss the balance of trade of the United States, usually with regards to such topics as foreign holdings of US dollars, US credit markets, and the flow of funds.

The balance of trade (or net exports is the difference between the monetary value of exports and imports of output in an economy over a certain period. It is the relationship between a nation’s imports and exports. A positive balance of trade is known as a trade surplus and consists of exporting more than is imported; an negative balance of trade is known as a trade deficit or, informally, a trade gap. The balance of trade is sometimes divided into a goods and a services balance. [Wikipedia]

US Trade Deficit

America’s best unemployment insurance

Unemployed men hop train (Canada, 1933)

When the Sage of Omaha, Warren Buffet, fretted last year that the trade deficit signified that foreigners were taking over the United States, he echoed common misunderstandings about the excess of US imports over exports and the growing volume of dollar assets held by the rest of the world.

The nice thing about the US trade deficit is that it represents the exchange of foreign goods and services for dollars, not foreign money.

January 2006

Trade deficit continues to support bonds

More imports than exports creates a trade deficit

The excess of imports over exports means that cash is flowing into the US capital market from abroad, which should continue to prop up long bond prices. The January trade deficit, annualized, represents a 13% increase over the trade deficit of 2005.

Since the trade deficit increased 18.3% in 2004 and 15.1% in 2005, the current rate of increase seems to indicate slower growth in the trade imbalance.

US Trade Deficit

Interest rates have been falling for decades

As the trade deficit has increased, US bond interest rates have fallen.

Since the 1980s, the US. trade deficit has been a constant force in the American economy, rising more some years than others, while corporate bond yields have been generally falling.

Because rising trade deficits lead to increased demand for fixed income securities, and because issuers have not fully met this demand, the price of bonds has risen for twenty years, while bond yields have fallen.

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What Is ‘International Liquidity’?

It used to be that the term 'international liquidity' meant the relative amount of resources available to a nation's monetary authorities that could be used to settle a balance of payments deficit. In the days of the gold standard, this would mean access to gold that could be used to redeem a nation's currency held by foreigners. More ...

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2011-11-25 13:03