Shrinking the budget deficit will help shrink the foreign trade deficit and vice versa.
The already-large foreign demand for investments in the U.S. is likely to grow from here, putting upward pressure on the trade deficit even if foreign growth continues to accelerate.
Part of each additional bond offering puts the company and the U.S. in the position of investing more than we save, drawing in foreign investment and contributing to the trade deficit.
The Japanese could trade the dollars on the foreign exchange to receive yen from any country that has a trade deficit with America and wants more dollars to buy American goods.
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So too is the record amount of foreign capital flowing into the country and a trade deficit that's tripled in the last year.
America, of course, still imports a massive amount of foreign oil and runs a substantial energy-related trade deficit.
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As seen through the foreign currency exchange, the American still wants a trade deficit for the same reasons she did before in the bartering system.
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The problem is not so much the budget deficit (though Greece was certainly profligate) as the net foreign borrowing by all actors, public and private (say to finance a trade deficit).
He started buying foreign currencies for the first time in 2002, with the idea that a growing trade deficit and other economic policies coming out of Washington would cause the dollar to fall.
The trade deficit has helped the U.S. maintain the highest level of foreign direct investment in the world by far.
The US gets a cheap and stable source of funding for its trade deficit, allowing the economy to continue to grow as consumers purchase cheap foreign goods - whose low prices keep inflation in check.
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