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To: Ahda who wrote (222912)2/20/2003 2:07:31 PM
From: GraceZ  Read Replies (1) | Respond to of 436258
 
Darleen, the trade deficit is directly related to foreign investment flows. You can't have one without the other. The trade deficit and foreign flows are directly related to the national savings rate. Countries with a trade surplus also have high savings rates....like Japan. Countries with a high trade deficits have a low savings rate and a high foreign investment flow, like the US.

If a trade deficit was necessarily bad and a trade surplus was necessarily good then we would have been inclined to sell US assets and buy Japanese ones.

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