The government knows how to make important facts really boring. Consider this:
The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that total November exports of $177.8 billion and imports of $225.6 billion resulted in a goods and services deficit of $47.8 billion, up from $43.3 billion in October, revised. November exports were $1.5 billion less than October exports of $179.4 billion. November imports were $2.9 billion more than October imports of $222.6 billion.
On the contrary: oh, boy.
Do you see what this means? Foreign central banks — mostly Asian — are buying Treasury debt. They create money out of nothing to do this. This keeps the dollar high: more demand for dollars, which central banks use to buy dollars (raising the dollar) to buy T-bills.
This is a subsidy to Americans. We get cheaper goods from abroad.
The balance of payments is not approaching $48 billion a month. This means almost $575 billion a year. That’s foreign aid. From, not to.
This is never discussed in terms of foreign aid, but it should be. This is a subsidy to American customers. It is also a subsidy to the U.S. Treasury.
Year after year, the USA runs a huge payments deficit with foreigners, mainly foreign central banks. This is the meaning of the phrase, “reserve currency.” They hold IOUs from the U.S. government. These IOUs will never be paid off. At today’s interest rates, the Treasury is borrowing this money at almost free.
This means that Americans are being subsidized by foreign governments. We can buy goods cheap because of these subsidies.
Someday, this will end. The rest of the world will stop sending foreign aid to Washington. Import prices will rise. Exports will increase. This means that foreigners, not Americans, will buy what Americans produce. The rest of us will pay higher prices. Imported goods will be more costly, since there will be fewer of them. Domestically produced goods will also rise in price.
There are the “good old days.” If you want to get a piece of the action, buy imports. I recommend anything that helps you produce: tools of the trade.