Professor: US trade deficits homegrown

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Transcript

00:00All right, Steve, what's your take?

00:02Well, my take is that I don't think we've been victimized in the United States.

00:08The trade deficit results from a very fundamental identity in economics.

00:16It's a savings-investment identity, and the deficits in the United States aren't caused by foreigners ripping us off and giving us a bad deal.

00:26They're homegrown.

00:27The savings in the United States are deficient relative to the investment, and that deficiency, that gap, is filled in with trade.

00:38It's just a simple identity in economics.

00:41So the idea that somehow foreigners cause this is just incorrect.

00:48It's just absolute nonsense.

00:50It's deficits or surpluses, whatever the imbalances are in the international accounts.

00:55They're created domestically, not by foreigners.

01:00Why does China have a huge surplus?

01:02Because they have a surplus of savings relative to investment.

01:07Switzerland, exactly the same thing.

01:10Any country with a surplus has a surplus of savings relative to investment.

01:18Any country that is witnessing a deficit has a deficiency of savings relative to investment.

01:26Greece,

01:37is that's the M informations Foromm escout for the month?

01:43No one other person wanted to be a marathon.

01:44Can't wait.

01:48Want to see crucial opportunities for you are going to win.