The common view that our budget deficits (which Bernanke correctly thinks should be reduced) cause our trade deficits is simply wrong. The two are only loosely connected. That unconventional reality is also inconvenient, because it measures our powerlessness.
Seems to me that too many people don't realize this. If the two were related then we should have seen the trade deficit shrink during the budget surpluses of the 1990s. Instead the opposite occurred.
No comments:
Post a Comment