Concerns that the U.S. trade deficit will drag down the dollar are overdone
For President Trump’s chief economic adviser, Stephen Miran, and economists such as Peking University’s Michael Pettis, the explanation is the dollar’s “global reserve” role.
They argue that it prompts exporter nations with excess savings, particularly China, to invest in U.S. assets, with the resulting capital inflows keeping the dollar overvalued and forcing either the federal government or Americans themselves to take on excessive debt
—the latter having caused the 2008 financial crisis.
But this isn’t quite right.
When foreign companies sell more to the U.S. than they buy, they end up with dollars in cash, which is a U.S. liability. But this is just payment for purchases, it doesn’t imply U.S. importers literally borrowing from overseas.
Foreign exporters aren’t refinancing ever-expanding debt: They are selling products and accumulating money in the bank, with little reason to stop—even if those dollars are eventually recycled into other investments.
Wall Street Journal 9 June 2025
https://www.wsj.com/finance/currencies/trade-deficit-us-dollar-outlook-13f0a4f8
Klas Eklund: Handelskriget är en del i en bredare amerikansk strategi; Miran
Detta är rent hialöst.
Vi måste överväga en övergång till euro.
Today, however, conditions have changed dramatically.
Capital flows dwarf trade flows, and investment decisions by fund managers determine their direction and size.
Michael Pettis, Bloomberg 3 April 2017
https://englundmacro.blogspot.com/2017/04/whats-really-driving-us-trade-deficit.html
https://englundmacro.blogspot.com/2025/05/usd-och-handelsunderskottet.html
Martin Wolf; to turn the surplus in some countries into productive investment elsewhere
https://englundmacro.blogspot.com/2025/05/martin-wolf-to-turn-surplus-in-some.html
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