BusinessDaily.eu – By Mikkel Egesberg– In this article we will take a look at the US tradebalance in goods for the last 25 years. The tradebalance is exports minus imports, and as the numbers show, the US has had a trade-deficit with the world in ALL MONTHS for the last 25+ years (the statistics stop here -Take notice that this is only showing goods, and does not include services):
In short, for the last 25+ years the US has bought more goods abroad, than it has sold. Since the tradebalance equals savings minus investment (NX = S-I), we can also say that the US is saving too little and has done so for the last 25 years. The US is buying on credit, it borrows savings from abroad to finance it’s investments.
You do not have to be an economist to realise that this is not sustainable in the long run, and sooner or later it will put the value of the US dollar under pressure. China eg. will only keep accepting the US dollar as payment for their goods for a certain amount of time, if every time the US needs more goods, it just prints the money it needs. Even though the US buys more than it sells to the world, and thereby increase the world supply of US dollars, the US dollar has still been in demand and maintained its value, since oil and other goods are traded in US dollars, for now…
The number for December 2012 is not in yet, but when it is, it will be included in the chart below, which shows the US goods trade-deficit with the world from 2000 to 2011 in years, instead of per month as done above:
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