RECORD
TRADE DEFICIT THREATENS PROSPERITY
By Patrick J. Buchanan
Washington. D.C.
July 19, 2000
“In
May the U.S. trade deficit crossed the $31 billion threshold, a
record. The merchandise trade deficit hit $37 billion. The U.S.
is importing, on an annual basis, $446 billion more in goods than
we export. Our merchandise trade deficit is nearing 5% of GDP. The
same holds true for the current account deficit, which includes
net U.S. payments to foreign individuals, corporations, and countries.
There is no precedent for deficits like these in modern American
history.
“The
Alfred E. Newman School of Economics, today ascendant, holds that
we live in the best of all possible worlds, the ‘Global Economy.’
Yet, as a result of these deficits, which amount to U.S. borrowing
abroad to finance consumption at home, and which pile up dollars
and debt in foreign countries, 12% of all U.S. equities, 20% of
all U.S. corporate debt, and 38% of our federal debt is now held
by foreigners.
“When
the dollar begins to fall, because of these trade deficits, there
will be a powerful incentive for foreign holders of U.S. debt and
equities to dump all these depreciating U.S. ‘assets’ as fast as
they can. Should that happen, all our doctors Pangloss will enter
the history books alongside Yale’s Dr. Irving Fischer, who gazed
upon the soaring market in the autumn of 1929 and declared, ‘Stock
prices have reached what looks like a permanently high plateau.’”
