US Trade Deficit (was, RE: moyhnihan on social security woes)

[Brad Mayer]

Instead, the (presumably Federal revenue) surplus has acted as "collateral" 
on the current account trade deficit.  It insures that this deficit remains 
in play as an ongoing financial process.  This makes sense if the Clinton 
revenue policy is seen as a kind of forced socialized savings deployed as 
reserve banking capital, permitting (as with any banking operation) the 
extension of credit (through the intermediary of the commercial banks), in 
this case, for imported commodities, due to increasing 'globalization' of 
production and consumption.  And as the surplus increased, so did the trade 
'credit' bubble.  This view would explain the ongoing "sustainability" of 
the trade deficit.

In light of this, the Bush revenue reductions may have the (perhaps 
unintended) consequence of pricking this bubble.  Or perhaps the 
Republicans are gambling that 'there is no alternative' to ongoing finance 
of the US trade deficit from abroad, with or without the "collateral".

  -Brad Mayer

At 01:38 PM 6/19/01 -0400, you wrote:
>surpluses were held to reduce our trade deficit, though this hasn't
>happened.  A lower trade deficit means less foreign claims on U.S.
>capital/more U.S. claims on foreign capital.