“The Chinese are raping us” and “Canada is killing our farmers”! Such melodramatic claims from Trump resonate with many Americans, because the effects of globalization have been devastating for half the population. To his credit, Trump has been harping on trade deficit for thirty years – he was complaining about the Japanese in the 1980s. However, he’s vastly oversimplifying the issue and the solutions. This is an important topic that requires serious thoughts.
What is Trade Deficit?
Simply put, trade balance is the difference between our exports and imports. If we export more than we import, we have a trade surplus; but if we import more than we export, alas, we have a trade deficit!
Why Trade Deficit is Bad
Trade deficit is transfer of wealth.
Since our Federal Reserve Bank creates fiat money out of thin air, it’s hard to see the adverse effects of trade deficits…
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