SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Mark Adams who wrote (26226)2/10/2005 7:35:37 PM
From: Gemlaoshi  Read Replies (1) of 110194
 
<<The US trade deficit does not spell doom>>
Mark, I expect better from the Financial Times, but the author of your article mistakenly interchanges U.S. trade accounts, and the U.S. current accounts. Here is a good reference from the BEA.

bea.gov

As manufacturing continues to become a smaller percentage of our GDP, it stands to reason that we are exporting less and importing more manufactured goods, increasing the trade deficit.

However the current accounts also include capital flows, and therein lies the devil! The rest of the world currently owns roughly $2.5 trillion more of us than we own of them. That includes our productive assets, natural resources, real estate, and lets not forget our debt and equity securities.

This has been referred to by Warren Buffett and others as "selling our seed corn," or a "hollowing out" of our economy. We are selling our future productive capacity and natural resources in exchange for heightened current consumption. Others refer to it simply as "living beyond our means."

So, the growing trade deficit does not necessarily spell doom, but the growing current account deficit indicates a distinct lower standard of living in the future.

Dave
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2026 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News