Comment by svara
7 days ago
The trade deficit is balanced by USD flows, which are ultimately reinvested with leverage into American capital markets.
In many ways the US trade deficit combined with the USD reserve currency status is thus what enables the high budget deficit in the first place.
this SHOULD be really obvious to those in charge, but I think is too subtle for them, or they're willfully ignoring it for the "trade deficit" narrative. I don't see how the end result is not a decline in the global role of the US and a whole bunch of pain for everybody as this all unwinds. All for the hubris of an old man...