In 2024 the U.S. exported $4.8 trillion in goods and services, and imported $5.9 trillion of goods and services, leading to a current account deficit of $1.1 trillion. But the deficit failed to account for the $1.1 trillion of goods that were in Americas hands. There was no deficit when the goods are properly accounted for. Lets repeat that. There was no deficit. The so called “Trade Deficit” should be called the “Trade Difference” and the money that was collected by the exporting country was balanced by the goods that were received.
In the alternative the U.S. shipped (exported) $4.8 trillion in goods and received $4.8 trillion dollars in payment. So: $4.8 trillion went out and $4.8 trillion came in. The net balance is zero.
The U.S. imported $5.9 trillion in goods which was balanced by $5.9 trillion dollars that was exported in payment. The net balance is zero.
The equation that covers all this is:
$4.8 – $4.8 + $5.9 – $5.9 = $0.
Or:
$4.8E – $4.8P -$5.9I + $5.9P = $0.
The economists need to start understanding that imported and exported products are enmeshed with imported and exported payments. There are no products without payment and there are no payments without products. Shipments include payment. Imports include payments. Export Products plus Imported Payments equal zero.
Imported products plus Exported Payments = Zero… Zero plus zero equals zero.
Zero minus zero equals zero… Zero plus/minus zero equals zero.
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