One of the best decisions I made in the early 1990s was to allow Herb Stein to pieces about the payment balance. Economics’s concise encyclopedia, It was then Encyclopedia of Economics. His first two paragraphs are still beautiful.
FEconomics EW Subjects have caused too much confusion and unfounded fear for the past 400 years, the idea that the state could have a deficit in the balance of payment. This fear has no basis for two reasons. (1) If there is no deficit and (2), there will be nothing harm.
The state’s payment balance account records the payment and receipts of the residents in the transaction with other national residents. If all transactions are included, paying and receipts for each country must be the same. Clear inequality is simply acquired by another country. For example, when an American buys a car japanSince there is no other deal with Japan, the Japanese must have a dollar and can be held in the form of bank deposits in the United States or other US. invest. The payments paid by Americans to Japan for automobiles are paid and balanced for the acquisition of dollar assets to individuals and institutions, including banks. In another way, Japan sold US cars, and the United States sold the Japanese dollar or dollar cover assets, such as the Treasury Book and the New York office building.
Herb encyclopedia At the beginning of this century, I updated his numbers and added the last two paragraphs with the help of Kevin Hoober and Mack OTT.
In the late 1990s and early 2000s, these concerns reappeared in the late 1990s and early 2000s, increasing from $ 4 billion in late 1991 to $ 660 billion in 2004. Interestingly, all of the current account surplus in 1981 and 1991 occurred in the middle of the US economic downturn, and a major flaw occurred during the US economic expansion. This is meaningful because US imports are very sensitive to the US economic situation, and if the US GDP falls, it will increase proportionally when the US GDP rises. As in the 1980s, US employment has expanded US employment by adding more than 20 million jobs between 1991 and 2004. In addition, the proportion of the population increased from 61.7 %in 1991 to 64.4 %in 2000 and 62.3 %in 2004, but it was still slightly lower than in 1991.
What is the issue of foreign ownership? By the end of 2003, Americans owned overseas assets at a market price of $ 7.86 trillion, while foreigners owned US assets with a market price of $ 10.52 trillion. Therefore, the US net international investment status was $ 2.66 trillion. This was only 8.5 %of US capital.
By the way, HERB was a boss of the Summer Economic Advisory Council in the summer of 1973, when I was a summer intern in the first year. UCLA student. He was one of the best two bosses I had. (The other was Bill Meckling, Dean of Business School at Rochester University.)
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