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U.S. Trade Deficit 2024
by Alasdair MacLeod Gold Money
No one is talking about the US trade deficit in the current fiscal year, but it is likely to be another record, bringing with it new rounds of trade sanctions and protectionism.
In this article, I explain why the twin deficit hypothesis will apply, bearing in mind a likely budget deficit outturn of $3 trillion and a negative savings rate.
The extent to which politics demands protectionism will drive consumer prices higher than they otherwise would be. Put another way, the purchasing power of the dollar faces a renewed decline. A falling value for dollar credit as America enters a recession which promises to be deep is the worst outcome for policy makers faced with funding a soaring budget deficit. Other than tame buyers in offshore financial centres, major holders are turning sellers, not just of dollars, but US Treasuries as well.