Soaring US budget surplus

[Brad De Long]

>Chris Burford wrote:
>
>>I gather that the trend for the US government to run a budget 
>>surplus is so strong that it may be possible to pay off the 
>>national debt by 2012.
>>
>>I understand the USA is still running a substantial trade deficit.
>>
>>Could someone spell out if there is any relation at all between a 
>>budget surplus in the accounts of a national government and, on the 
>>other hand, a trade deficit.
>
>Evidently there isn't.
>
>Doug

Well, *if* private savings rates stay constant and *if* investment 
rates stay constant, then a shift in the national government's budget 
balance will be accompanied by an equal shift in the trade balance.

But there is no reason to think that those two *ifs* will hold in general...

Brad DeLong