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In this case, we have been running a trade deficit since the 1970s.
by yuhong 8y ago
In this case, we have been running a trade deficit since the 1970s.
- Nasrudith 8y agoIt is a world reserve currency as well making a deficit pretty much inevitable as long as it holds. Getting goods in exchange for spreading your currency's reach sounds like a pretty good deal to me. Effectively it gives a "virtual economy size" from worldwide dollar users over just producing for the local economy - not doing so in response would be deflationary. They need some sort of goods or services in exchange so the economic backing is provided for any outflowing currency.
- yuhong 8y agoThe point is that it destroys local manufacturing though, leading to more and more goods being imported.