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To: GST who wrote (159708)	1/4/2004 4:36:00 PM
From: Oeconomicus	Read Replies (1) \| Respond to of 164684

the current account deficit has a relationship to the budget deficit. Yeah, both are measured here in dollars and both have the same sign - i.e. they are currently deficits. We do not "borrow $1.5B/day" from foreigners to pay for tax cuts and government spending - we export $1.5B of currency in exchange for goods and services. That is what a "current account deficit" is. What the recipients of those dollars do with them has no impact on the "current account" unless they turn around and buy US goods and services with them. If that's not what you learnt in "Econ with Dizzie", you might want to ask for a tuition refund. BTW, while Clinton was in office, the current account deficit went from $48 billion ($131 million per day) in 1992 to $411 billion ($1.13 billion per day) in 2000. Oh, and the budget deficit was declining. Is that the "relationship" you meant to claim? PS: If you want to talk about the "capital account balance", foreign purchases of US Treasury securities over the last year came to under $700 million per day ($726 million per day in the latest quarter). OTOH, foreign direct investment, purchases of non-treasury securities and non-banking obligations, and deposits of various sorts in US banks came to almost $1.4 billion per day. In other words, foreign capital inflows have gone primarily to investments that tend to boost US productive capacity, not to finance government deficits.