What's A Deficit To You Anyway?

Most of you have probably figured out from listening to the news that there are two kinds of deficits discussed in the news and not just a "big D" deficit that covers the whole topic.

One would be the trade deficit and the other would be the budget deficit.

At the risk of inviting a legion of flamers with doctoral degrees in economics, I would like to point out that the the two kinds of deficits are in fact close siblings and share a nexus with class warfare.

Both deficits represent sectors of the American public living beyond their means.

The trade deficit represents the American economy consuming more than it produces. It is measured in dollars and quite literally is the result of importing more than we export. One could say that we import goods and export dollars.

If this went on forever one could imagine a day when we would run out of dollars and had to simply print more of them, which we are probably doing to some extent already. But this is where the other form of deficit, the budget deficit comes into play.

Rather that sitting idly by and allowing the American dollar to find its way back home like a hungry messenger bird, the Federal Government inserts itself into the loop by running a budget deficit. This budget deficit enables nations like China with too many of our deficit dollars laying around in their cash boxes to buy US treasuries (aka I.O.U.s) thereby allowing the federal government to reinsert these dollars back at home through deficit spending.

Sounds pretty good doesn't it? The solution for the American consumer and worker living beyond his and her means is for the government to live beyond its means as well.

You don't have to think too deeply to realize that these are the sort of structural imbalances that lead to jobs being exported to where the goods we buy are actually made. So much for the working class.

Not all of those trade deficit dollars that come back here get invested in treasuries. Some get invested on wall street as well. There is still a lot of money to be made in this country, it's just that most of it seems to be made by people who move money around rather than actually producing anything.

The end result is two classes of people. A working class which is losing its manufacturing jobs to places like China and Mexico and left with places to work like Wal-Mart and McDonald's and a financial warrior class which takes as its profit a virtual tax from the structural imbalances that have been introduced into the economy with the not so hidden intent of dismantling the middle class.

If you want to figure out who benefits the most from these structural imbalances (deficits) the most just ask yourself who isn't paying their fair share of our nation's taxes.