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To: GST who wrote (123200)4/9/2001 3:15:00 PM
From: Wayners  Read Replies (1) | Respond to of 164684
 
There's a few things you left out. The U.S. offsets a lot but not all of the trade deficit through returns on overseas investments in the Capital Account. Another is the errors and omissions in the balance of payments tend to be very large in the Capital Account.



To: GST who wrote (123200)4/9/2001 4:55:28 PM
From: Wayners  Read Replies (1) | Respond to of 164684
 
I think thats a good simple explanation of how free floating currencies work. What do you think is an excessive balance of payments deficit? Seems like you have to calculate its percentage of GDP or something like that to tell if its excessive or not on a historical basis.