The U.S. Bureau of Economic Analysis just announced that the trade deficit for March increased to $48.2 billion.
The federal budget deficit plays a major role in creating U.S. trade deficits. When the government sells Treasury bonds to finance the budget deficit, it competes with U.S. exporters and private borrowers for scarce foreign dollars.
For example, in January the federal government borrowed $46.483 billion from abroad, and the United States ran a trade deficit of $46.969 billion.
Trade deficits are not necessarily a cause for concern. But in this case, they are a symptom of the real problem: massive government budget deficits.
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Congress seems to like a trade deficit, because it creates a ready-made audience for Treasury debt. If foreign companies & governments are holding US dollars from selling goods to the USA, yet not purchasing equal amounts of American-made goods, then they have to park their dollars somewhere. The Congress is behholden to this market to finance their deficit!
This doesn't pass the smell test, does it? It sure would be nice to have a full accounting of the Macro Economic facts on the ground. Where the Money Goes is hidden, unknowable, unthinkable and I suppose it would be "Hate Speech" to talk about it! We gave China 'Most Favored Nation' status, they gave us butkis! We sent China millions of our jobs and billions of our Capital. In return We Owe Them money!
It looks like Americans got a Double Bad Deal from China! I wish Donald Trump would come forth with some facts! Maybe it is three times worse than Trump makes out!
Thanks to the Glen Beck wannabees this stuff is usually taken at face value.
China takes cheap U.S. dollars, then uses that to fund aggressively fund business expansion throughout the world – especially Southeast Asia. Meanwhile, hhomegrown American business that needs to expand can't get a loan for squat, and are forced to pull back international operations; and China is all but too happy to fill that void.
Excellent post… The current trade deficit is unsustainable. I would argue that the trade deficit is largely responsible for the federal deficit.