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Upside-Down Economic Reporting: Higher Oil Prices Are Good.

Written by Gary North on September 5, 2013

I am always astounded at what passes for economic analysis in the media. This is a recent example. Bloomberg ran a headline: Widening Trade Deficit Signals Improving U.S. Demand: Economy.

I see. A trade deficit. Americans are borrowing more from abroad — foreign lenders — to buy things. What kind of things? We read: “The trade deficit in the U.S. widened in July from an almost four-year low as Americans imported more fuel and automobiles, showing the world’s largest economy is picking up.”

I see. We will pay more for oil. We import a lot of oil. Imported oil is the #1 component of the items we import.

Imports will probably keep rising, reflecting improving demand and a jump in crude-oil prices as tensions mount in the Middle East.

I see. A war looms. Oil will rise in price. The world will pay more to oil-exporting national governments.

This is proof of good times ahead.

The rising trade deficit (an excess of imports) is good because it will lead to more exports. “At the same time, a strengthening U.S. expansion is helping companies in the European Union and China boost sales, which will stabilize global growth and, in turn, improve prospects for American exports.”

I see. Rising imports mean rising exports. Later. One of these days. Real Soon Now.

And so it goes. Economic education marches forward.

Continue Reading on www.bloomberg.com

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