Monday, August 29, 2005

The Trade Deficit

I found this interesting when I was looking at data regarding housing expenditures the other day. Much has been made about the "record trade deficit" recently, and I agree it is a major economic issue, although I don't pretend to know how it will work out. One thing nobody is really pointing out though is this isn't really a result of a lack of competitiveness, in the sense that nobody is buying US goods and services, we are selling record numbers of those. The problem is, we are buying even more foreign goods and services. This is unprecedented, but short of a traumatic currency devaluation, how do you tell US consumers and corporations to quit buying cheap foreign goods? Should you even try?