Tag: "imports"

The U.S. Trade Deficit Increases: Alternative Explanations

The goods and services trade deficit widened in September, reversing recent improvements. It was good news that both imports and exports increased after a shrinkage of trade resulting from the global contraction. The deficit increased because imports increased more than exports. Exports or goods and services increased by $3.7 billion to $132.0 billion while imports […]

Dollar Confusion

Credits in the U.S. balance of payments give rise to a demand for dollars. Debits reflect the supply of dollars. Together, they determined the exchange rate for the dollar. So far, so good. Everybody knows that. Then why is it that virtually all the commentary on the dollar on financial TV and in blogs fails […]

Third Quarter Real GDP

(Not All Details are Bad) The front page of today’s Wall Street Journal features a useful breakdown of the third quarter real GDP statistics. On the negative side, it shows that the strength in consumption spending benefited from various temporary government programs: primarily cash for clunkers and the first time home buyers’ credit. Those will […]

A Trade War with China Wouldn’t be Terribly Helpful Under the Circumstances

Why can’t we learn even the most obvious lessons from the Great Depression? Many policy mistakes were made then, but perhaps the biggest and most destructive was the Smoot-Hawley tariff that contributed to a world-wide trade war and the reinforcement of the depression’s downward spiral. We’ve already dissed our Mexican neighbors by abrogating the trucking […]

International Trade and Investment

A Primer   The balance of payments always balances. That's why they call it the balance of payments. Constant balance (not to be confused with equilibrium) results from double entry accounting where total debits always equals total credits. Each international transaction results in a new debit and a matching new credit; an equal reduction in […]