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Politics : View from the Center and Left
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To: TimF who wrote (54249)3/17/2008 6:29:10 PM
From: neolib  Read Replies (1) of 542698
 
The T-bills are debt. The trade deficit is not the t-bills.

Lets see:

1) They send us net imports, we send them $
2) They send us $ we send them T-bills.
3) Cycle repeats

You could of course do it without the conversion of $ to T-bills and the implied Government debt. You can have a perfectly robust trade deficit if you just print money and hand it out to foreigners as well, in exchange for their products. But it will function just like debt denominated in your own currency when they finally decide they don't want $ anymore, and would like to get something else in exchange. Don't confuse the fact that the printed paper looks different, $ vs T-bills: They are all IOU's from the same country, backed by the same people.
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