Trade Deficit Perspective

   No surprise. Americans spend more money importing stuff than they collect selling stuff to other countries. In a nutshell, that's what the international trade deficit is.
   It's more than just stuff, however. The total also includes the value of services.
   The latest numbers from the Commerce Department showed July exports totaling $189.4 billion in value, and imports of $228.6 billion, resulting in a goods and services deficit of $39.1 billion, up from a $34.5 billion deficit the month before.
   So how important is this deficit, really? Well, for one thing, the negative sounding word "deficit" makes for a fine talking point for the political opposition. However, it's good to remember that the U.S. has been running a trade deficit for a very long time, even as political administrations change sides. And somebody's making money selling stuff and services overseas, even as the people overseas sell more to Americans than Americans sell to them.
   Why is this? Americans have more money. The country is still the richest in the world, with a total output of $16 trillion, twice that of China, the second richest economy.
   Do the math. What's the percentage? it's quite small, so why are some folks shouting and moaning? The reality is that trade works both ways. You can't do all your business selling and collecting money without eventually spending. Otherwise, you wind up with all money and no food. Not a good idea.
   Just for fun, let's assume a monthly deficit of $36 billion, totaling $432 billion for a year. On a $16 trillion economy, that comes to less than 3 percent for a year.
   Besides, in spending money and buying stuff from others, you help to support prosperity on both sides. And this is as true with individuals and families as it is with nations.
   Granted, at some point, eventually, in the future, if trade only goes one way, one side suffers. So yes, if the U.S. continues to post an international trade deficit, it may in the long run catch up and cause a problem.
   But that's only one side. Mercantilist and colonialist capitalism had no qualms about profiteering and sending the colonies into beggary. As long as it was the colonies that suffered, and not the home country.
   In any case, that international trade deficit covers that entire world. There are certainly many countries where U.S. companies enjoy a surplus.

   Meanwhile, the Federal Reserve Board, in its latest Beige Book summary of economic conditions in America, reported that things continued to improve at a modest pace.
   On the whole, for American companies, things ain't bad. However, many other nations are suffering, and soon may be unable to buy American or make stuff to sell to Americans.
   And then everyone suffers.