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Quote by: bishop in our economy, higher gdp growth pretty much always coincides with a larger trade deficit - because 2/3 of the economy if fueled by consumption and we import more than we export. |
And that's a curious thing, isn't it? Because there is no such thing as a trade imbalance. This is evident from the very definition of trade; a mutual exchange of value for value. The way trade imbalances are deduced is by focusing on just one side of a transaction.
For example, if Country Y exports more to Country X than Country X exports to Country Y, Country Y is said to have a trade deficit, and Country X is said to have a trade surplus. This is stupid because it does not regard the monetary value of what was traded. Another way to invent trade imbalances is by focusing on just the monetary transactions. If Country X pays more for goods imported from Country Y than Country Y spends on goods exported from Country X, a trade imbalance is said to exist. It does not regard what was traded for the money.
For anyone interested in more on the myth of trade imbalances, see
this article.