Thursday, July 19, 2007

Does a trade deficit hurt the U.S. economy?

Here's a good, concise story on why some of the sensationalized press concerning the U.S. trade deficit, and foreign (Chinese) holdings of U.S. debt, may not necessarily be the danger signal some are raising.

I think the bottom line is, for us as well as our country, to try to ride with and capitalize on the flow of change, instead of resisting it. To do so without compromising one's morals can sometimes be challenging (I had to give in and provide high-speed internet access to my children, for the benefit of their education), but can be rewarding in many ways if done conscientiously, diligently, and correctly.

And in all things, stay in touch with the Adviser Who Knows All.

Sir Chuck, of the House of Trinity investment firm


  1. Sir Chuck,

    That it a good article. The press is always so gloomy about the economy, even when it is doing very well with nearly full employment, that people get misled.

    I understand that for the first hundred years of our nations life we had a trade deficit most of the time. The rest of world provide our manufactured good while we built a nation.

    Also, there are many myths, or near myths, about our economy. For example, "...America's low rate of savings compared to the rest of the world" is often quoted with no one bothering to point out that the saving rate does not include IRA or investment in real estate or stocks. Why are Americans chasticed for being smart investors? Savings are taxable and earn very little interest.

    Sir John, on the rant

  2. Good points all, Sir John. I wasn't aware that the savings figures didn't include the investment numbers, but I had wondered. If that's the case, then in fact we should be even stronger economically than I had imagined.

    All who want to work, are able to, and even our poorest folks are healthier than the average person in most other countries. And we're still one of the most educated countries on the face of the earth; our natural resources are still abundant, nearly as much so as when our country was founded 200+ years ago; and above all, we have a democratic form of government that just seems to work better than all other national systems. We are truly blessed.

    Sir C