How Serious Is the Trade Deficit?
STOWE, Vt. (Casey Research Advertorial) — Last weeks report from our Treasury on foreign investment in the U.S. brings me to focus on the trade balance, related foreign investment, our loss of manufacturing, and the long-term implications. I have been monitoring the big imbalances of our economic system to determine if we are heading toward a big economic convulsion that would change our investments and our lives. I have been evaluating long-term historical measures of prosperity and economic movement, comparing the last big depression to now to see if we face similar situations. Some of the similarities look dangerous, like the large overall indebtedness of then and now. Some of the differences do not show so serious a situation today, such as the relatively stronger financial institutions that would surely get government bail-out if liquidity became a problem. But there is one difference that is much worse now: the trade deficit.
