SocialD
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I'm not an economist, but I'm starting to understand aspects of global trade alot better and how such impacts our national debt and deficit.
I think the simplest way to explain it is like this:
Our deficit would really be a problem IF America really didn't produce anything domestically that wasn't in high demand abroad AND we didn't have a surplus of same. Let's take apples, for example. Everyone loves apples. Let's say we grow more apples that can be consumed domestically. What do we do with the surplus? We sell them, of course, to foreign buyers. Here's where things get alittle tricky because the deficit comes into play here.
Some time ago, someone asked me "What is America's #1 commodity? What exactly do we trade the most? The answer: The U.S. Dollar! It's why there's so much emphasis on keeping it strong AND ensuring that the dollar remains the world's #1 reserve currency.
So, we trade (sell) U.S. securities (U.S. Treasury Notes/Bonds) to foreign investors (countries), pay the interest on those securities and foreign governments purchase U.S. goods and materials, some of which are used in foreign manufacturing. This list of not only the top 10 U.S. Exports along with a breakdown of what items are purchased from the U.S. by various countries around the world should make this global trade alittle bite more clear. Notice how machinery equipment, cars, medical equipment, aircrafts and spacecrafts, and electronics are on every list for foreign trade.
Now, that's not to say that the deficit couldn't come back and bite us in the butt. The deficit does matter, but only in the context as to whether or not we can't sell U.S. made products abroad OR we borrow more than we can repay over time. But, using the deficit as a political football is rather foolish. While fair to debate the merits of a trade imbalance, it's foolish to use the deficit as a wedge issue without first understanding whether or not we really do have a glut of U.S. surplus goods we can't get rid of either by domestic consumption or by exporting abroad.
What you says has a lot of truth but again deficit is being used where debt should be used.
Deficit is revenue/receipts minus spending/outlays. There can and are some receipts from treasury notes and bonds but its a very small slice of the economy. around 4% of total receipts. And as far as spending the whole Dept of Treasury comprises maybe 12% of our spending.