The counterargument hinges on the difference between the current account deficit and the trade deficit. The current account deficit is equal to the trade deficit plus the cost of servicing the net international asset position the net rent, interest, and dividends owed to foreigners who have invested their capital in the US.

Indeed, every year for more than three decades, the US Bureau of Economic Analysis (BEA) has reported a current account deficit. And yet now we must ask whether the US current account deficit is still a problem.

The move account was being retained pending receipt of additional funding to cover the cumulative deficit.

Thus, as capital inflows gave rise to a current account deficit, they ironically became the country s weakness.

Additional contributions and payment of outstanding pledges were required to offset the cumulative deficit in the hospital account.

Indeed, America s trade deficit in manufactures is roughly equal to its current account deficit (the amount by which domestic investment exceeds domestic saving). So those concerned with job losses in US manufacturing should join the chorus lobbying for a much smaller fiscal deficit.

Emergency relief operations resulted in current expenditures rising by 39 per cent, and the current account deficit reached US 7.9 million.

Large current account imbalances continue to characterize the global economy, and a lower dollar would contribute to reducing the United States deficit.

These objectives are consistent with lowering inflation to the single digit level and to moving towards a sustainable external current account deficit.

So, how should the US economy s jobs deficit, investment deficit, and long run fiscal deficit be addressed?

There is both a knowledge deficit and an understanding deficit.

Budget deficit

Deficit (surplus)

A deficit?

But if the US fails to narrow its savings gap, its current account deficit will not disappear, regardless of where the dollar goes. Whether America can achieve decent growth while keeping its current account deficit in check depends on whether it can reinvigorate its ability to innovate and create, thereby restoring competitiveness and creating demand at the same time.

In short, substantial RMB appreciation would reduce the bilateral US China trade deficit and China s overall trade surplus significantly, but it would do little to reduce the overall US trade deficit. In the absence of a generalized appreciation of all Asian currencies and unchanged American policies, possibly only a deep recession could reduce the overall US current account deficit.

Europe s Trust Deficit

Europe s Vision Deficit

The Energy Deficit

Difference (surplus deficit)

Ireland is the only country that has lowered its prices and wages, and its current account deficit is about to swing into surplus. By contrast, Spain s external deficit is still above 4 of GDP, while Portugal and Greece recently recorded astronomical figures of around 10 .

Growth momentum has fizzled and, with inflation persistently high, Indian producers are struggling to compete in world markets. The current account deficit is increasing relentlessly, owing to a widening trade deficit (now at 13 of GDP), raising the danger of a balance of payments crisis.

However, a massive inflow of capital would result in a certain degree of appreciation and a growing current account deficit, a situation that could make markets nervous.

Considerable private market funds had poured into the country in recent years, easily financing a current account deficit that exceeded 8 per cent of GDP in 1996.

Given the large current account deficit, the sluggish economic growth and the apparently overvalued exchange rate, investors began to express concern, especially following some destabilizing political events.

It perpetuates deficit spending.

Europe s Pointless Deficit Targets?

America s Misplaced Deficit Complacency

Global Warming s Technology Deficit

Closing America s Jobs Deficit

The Global Trust Deficit

3. Projected operating deficit

3. Projected operating deficit

3. Projected operating deficit

3. Projected operating deficit

3. Projected operating deficit

3. Projected operating deficit

Surplus (deficit) for period

Valuation results surplus (deficit)

Since 2007, the US current account deficit has narrowed, but not because of a higher savings rate. Rather, the external deficit has been squeezed by a collapse in investment activity, while America s overall savings rate has fallen below 13 of GDP, owing to worsening government finances.

In the short run, the US current account deficit will remain, regardless of which country runs bilateral surpluses. Thus, China s continued reinvestment of its current account surplus in US government securities is of utmost important for US growth and financial stability.

Perhaps the most notable consequence of Spain s recent reform efforts is its current account surplus the country s first in more than two decades. At the peak of the crisis, Spain s current account deficit amounted to an unprecedented 10 of GDP.

After all, America s still large current account deficit guarantees that the dollar will continue to fall. Even so, the macroeconomic logic that large current account deficits signal that currencies are overvalued continues to escape the world s international financial investors and speculators.

But none of these is the deficit that really matters. The deficit that prevents Europe from drawing a line under its crisis is a deficit of trust.

BERKELEY The United States is beset by four deficits a fiscal deficit, a jobs deficit, a deficit in public investment, and an opportunity deficit. The budget proposals put forward by presidential candidate Mitt Romney and his running mate, Paul Ryan, could reduce the fiscal deficit, but would exacerbate the other three.