#externaldeficits — Public Fediverse posts

"[O]ne can see at least three large holes in this rather complacent view of large and persistent global imbalances. The first is that they have become politically noxious — so noxious, indeed, that they helped get Trump elected president, twice. The second is that, on the surplus side of the ledger lie negative-sum interventions designed to shift the global balance of economic power. While international relations is not only about economic power, the latter is certainly a crucial part of it.

The third is that the counterpart of external deficits tends to be unsustainable domestic borrowing. Combined with financial fragility, the latter can lead to huge financial crises, as it did between 2007 and 2015. Sectoral savings and investment balances are revealing indicators of this last challenge. Foreigners have been running a substantial savings surplus with the US for decades. US businesses have also been in balance or surplus since the early 2000s, while US households have been in surplus since 2008. Since these sectoral balances have to add to zero, the domestic counterpart of US current account deficits has been chronic fiscal deficits.

If real interest rates had been high, fiscal deficits might have been driving the chronic external deficits. But the opposite has been true: real interest rates have been either low or very low."

https://www.ft.com/content/49e38ee8-f37e-47da-8ee4-1631175d2224

#USA #Trump #Tariffs #TradeWar #China #GlobalImbalances #ExternalDeficits

"[O]ne can see at least three large holes in this rather complacent view of large and persistent global imbalances. The first is that they have become politically noxious — so noxious, indeed, that they helped get Trump elected president, twice. The second is that, on the surplus side of the ledger lie negative-sum interventions designed to shift the global balance of economic power. While international relations is not only about economic power, the latter is certainly a crucial part of it.

The third is that the counterpart of external deficits tends to be unsustainable domestic borrowing. Combined with financial fragility, the latter can lead to huge financial crises, as it did between 2007 and 2015. Sectoral savings and investment balances are revealing indicators of this last challenge. Foreigners have been running a substantial savings surplus with the US for decades. US businesses have also been in balance or surplus since the early 2000s, while US households have been in surplus since 2008. Since these sectoral balances have to add to zero, the domestic counterpart of US current account deficits has been chronic fiscal deficits.

If real interest rates had been high, fiscal deficits might have been driving the chronic external deficits. But the opposite has been true: real interest rates have been either low or very low."

https://www.ft.com/content/49e38ee8-f37e-47da-8ee4-1631175d2224

#USA #Trump #Tariffs #TradeWar #China #GlobalImbalances #ExternalDeficits

"[O]ne can see at least three large holes in this rather complacent view of large and persistent global imbalances. The first is that they have become politically noxious — so noxious, indeed, that they helped get Trump elected president, twice. The second is that, on the surplus side of the ledger lie negative-sum interventions designed to shift the global balance of economic power. While international relations is not only about economic power, the latter is certainly a crucial part of it.

The third is that the counterpart of external deficits tends to be unsustainable domestic borrowing. Combined with financial fragility, the latter can lead to huge financial crises, as it did between 2007 and 2015. Sectoral savings and investment balances are revealing indicators of this last challenge. Foreigners have been running a substantial savings surplus with the US for decades. US businesses have also been in balance or surplus since the early 2000s, while US households have been in surplus since 2008. Since these sectoral balances have to add to zero, the domestic counterpart of US current account deficits has been chronic fiscal deficits.

If real interest rates had been high, fiscal deficits might have been driving the chronic external deficits. But the opposite has been true: real interest rates have been either low or very low."

https://www.ft.com/content/49e38ee8-f37e-47da-8ee4-1631175d2224

#USA #Trump #Tariffs #TradeWar #China #GlobalImbalances #ExternalDeficits

"[O]ne can see at least three large holes in this rather complacent view of large and persistent global imbalances. The first is that they have become politically noxious — so noxious, indeed, that they helped get Trump elected president, twice. The second is that, on the surplus side of the ledger lie negative-sum interventions designed to shift the global balance of economic power. While international relations is not only about economic power, the latter is certainly a crucial part of it.

The third is that the counterpart of external deficits tends to be unsustainable domestic borrowing. Combined with financial fragility, the latter can lead to huge financial crises, as it did between 2007 and 2015. Sectoral savings and investment balances are revealing indicators of this last challenge. Foreigners have been running a substantial savings surplus with the US for decades. US businesses have also been in balance or surplus since the early 2000s, while US households have been in surplus since 2008. Since these sectoral balances have to add to zero, the domestic counterpart of US current account deficits has been chronic fiscal deficits.

If real interest rates had been high, fiscal deficits might have been driving the chronic external deficits. But the opposite has been true: real interest rates have been either low or very low."

https://www.ft.com/content/49e38ee8-f37e-47da-8ee4-1631175d2224

#USA #Trump #Tariffs #TradeWar #China #GlobalImbalances #ExternalDeficits

"[O]ne can see at least three large holes in this rather complacent view of large and persistent global imbalances. The first is that they have become politically noxious — so noxious, indeed, that they helped get Trump elected president, twice. The second is that, on the surplus side of the ledger lie negative-sum interventions designed to shift the global balance of economic power. While international relations is not only about economic power, the latter is certainly a crucial part of it.

The third is that the counterpart of external deficits tends to be unsustainable domestic borrowing. Combined with financial fragility, the latter can lead to huge financial crises, as it did between 2007 and 2015. Sectoral savings and investment balances are revealing indicators of this last challenge. Foreigners have been running a substantial savings surplus with the US for decades. US businesses have also been in balance or surplus since the early 2000s, while US households have been in surplus since 2008. Since these sectoral balances have to add to zero, the domestic counterpart of US current account deficits has been chronic fiscal deficits.

If real interest rates had been high, fiscal deficits might have been driving the chronic external deficits. But the opposite has been true: real interest rates have been either low or very low."

https://www.ft.com/content/49e38ee8-f37e-47da-8ee4-1631175d2224

#USA #Trump #Tariffs #TradeWar #China #GlobalImbalances #ExternalDeficits