Bank Directors Seminar, Coeur d'Alene, ID

What about our international trade deficit? Answer: Don’t lose too much sleep over it – We have been running a trade deficit for the last 40 years! Suggest to me it is not a big problem. It is growing, but I think this is due to “globalization,” which is a good thing. – Note also, that our trade deficit generally gets smaller in our recessions (shaded areas in above chart). In other words, the way to eliminate our trade deficit is to make our economy worse! – The reason we have a trade deficit, to a certain extent, can be because foreigners want to buy our assets at a greater rate than we want to buy theirs. – This tells me that foreigners see greater opportunities in owning our assets, than we see in owning theirs. Isn’t this a good sign for the U.S. economy? – Note also that we earn more on our foreign asset holdings than foreigners earn own our assets. In other words, we seem to be better investors. Admittedly, this does work to keep our interest rates low, as Bernanke argues. But, this is not the only reason our interest rates are low. – In an increasingly Globalized World, borders matter less and less. For example, note that the iPhone is considered an import into the U.S. since the last stage of manufacturing is done in China, although the components are manufactured elsewhere, and the genius of it came from Steve Jobs and Apple, nothing more American exists, not even apple pie.

More things you should know – Artificial intelligence is no match for natural stupidity. – If you must choose between two evils, pick the one you've never tried before.