Trade Deficits: Exposing the Fallacies

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The handling of the trade deficit issue is perhaps one of the best examples of hokum that we must endure–wherein the masses are continually assaulted with unmitigated disinformation. I can’t think of anyone more heroic on the “trade deficit” issue then Don Boudreaux. He is relentless in his corrections of misinformation and mass media hysteria in regards to this issue. This blog post lays it out cleanly and perfectly: trade deficits are not to be equated with debt. Go, Don, go! As always, mainstream journalists–completely ignorant of economic facts–refer to the trade deficit as ” a menace to the world economy.” Trade deficits are not a menace to anybody. They come about because of the appealing nature of this country’s potential for investment by foreign investors.

I’m waiting for a formal announcement, by the fools in Washington, of a “war” on the trade deficit. Oops–that’s already underway, in a sense. Imagine the mercantilist policies for import limitations that someone, somewhere in D.C. is cooking up? Along with Boudreaux, the Mises Institute also attacks this issue with great tenacity, as with this recent piece of genius by Thorsten Polleit. As with everything, the Austrian view scrubs away the hysterics and flub-ups, and steps in to offer clarity and percipience.

6:25 pm on December 20, 2005