If you want to see what a monetary-fueled trade imbalance looks like, check out the ports in the Los Angeles area. From MN Gordon at economicprism.com:
Have you recently bought furniture, auto parts, clothes, electronics, plastic wares, doofers, doodads, or other doohickeys? Chances are, they were made overseas.
The U.S. monthly trade deficit in February scored a new record. According to the Commerce Department, the U.S. imported $71.1 billion more goods and services than it exported. Of this, $30.3 billion was from China alone.
What’s more, the month of February only had 28 days. At a daily gap of $2.54 billion, had it been a full 31-day month, the monthly trade deficit would have been over $78 billion. What to make of it…
A trade deficit is not inherently bad. Remember, countries as a whole do not trade with each other. Individuals and businesses trade with other individuals and businesses between countries. Presumably they do so because it’s advantageous for both sides.
Sound money, of limited supply and market determined interest rates, would provide natural limits to how wide a trade deficit could expand. But we don’t live in a world of sound money and market determined interest rates. We live in a world of fake money where interest rates are set by central planners.
The gargantuan trade deficit is a byproduct of the insanity of central economic planning. Let’s follow the fake money and see where it leads…
The Federal Reserve creates credit from thin air and loans it to the U.S. Treasury in the form of Treasury bond purchases. At the same time, commercial banks extend credit via fractional reserve banking. The Federal Reserve encourages the over issuance of credit by artificially suppressing interest rates for extended time periods – often a decade or more.