News Desk: Special Reports

The U.S. Trade Deficit

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A trade deficit occurs when a country buys more goods and services from its trading partners around the world than it sells to them.  Under the gold standard, such deficits literally are impossible to sustain.  When a country consumes more than it produces prices automatically adjust around the world to make it more expensive for it to consume -- and more profitable for it to produce, allowing the system to rectify the imbalance in gentle, almost imperceptible, ways.  The Bretton Woods type system thwarted such automatic, daily, adjustments -- leading to bumpier and more painful adjustments.

SOURCE: U.S. Department of Commerce: Bureau of Economic Analysis, 2011-05-26


Kathleen M. Packard, Publisher
Ralph J. Benko, Editor

In Memoriam
Professor Jacques Rueff

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