Balance of payments is hard to grasp because it is an accounting dohickey made up of a lot of apples and oranges lumped in together. What we buy from other countries balanced against what they buy from us. What we invest in other countries balanced against what they invest in us. What our citizens and residents remit to the folks in the old country balanced against what they remit to us. Etc. All the money sloshing around all over the world gets measured as to whether it still belongs to us or we spent it elsewhere.
There are three basic components, the current account, the capital account, and the financial account.
ny.frb.org
Accounting is really one of my weakest points, unfortunately. I have a hard time grasping why what seems to be an asset is treated as a liability for accounting purposes.
But I do comprehend that the current account deficit is the one that gets people upset these days. Right now, it's about $195 billion, which, to me, is a tiny number compared to GDP (which is in the range of $12 trillion).
bea.gov
The trade deficit overall is $55 billion, again, a number you'd have a hard time paying off personally but tiny compared to GDP.
census.gov
Uh, oh, storm coming, need to log off. Will resume this thought later. |
