Mauldin has yet another excellent article regarding trade and trade deficits, as he says: "I have to confess something: I run a huge trade deficit. It’s not with China or Mexico, but with Amazon. I buy all sorts of goods from them and Jeff Bezos has yet to spend a penny with me. It’s just not fair."
The U.S trade deficit is just as useful. It does two very good things, 1) it gives us lots of cheap stuff, and 2) sends lot of U.S. dollars around the world to help maintain our currency as the world's reserve currency.
A great many people do not realize what advantages you get by issuing the world's reserve currency (like being able to run 130% debt-to-GDP without completely destroying your economy... yet).
If we pursue aggressive protectionism, it will deeply incentivize other countries to not hold as many U.S. dollars in their reserve pools and thus erode the dominance of the U.S. dollar as the world reserve currency.
This trade war nonsense is the only reason I refused to vote for Trump, because I understand the nature of trade and the advantages of our country issuing the world reserve currency.
Hopefully, Trump does not destroy this advantage with his tomfoolery.
Mauldin's article is posted below, but without images, since my email does not load images.
If you want the chart and image version, go to Mauldin's site, here:
http://www.mauldineconomics.com/frontlinethoughts/the-trade-deficit-isnt-the-boogeyman
