Deficits
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2171 examples of Deficits in a sentence
During the first half of the 2000’s, US policymakers chose not to worry about sustained current-account deficits, which peaked at above 6% of GDP.
They argued at first that the
deficits
merely reflected the world’s attraction to superior US investment opportunities, an odd position given that the US was not growing especially quickly compared to emerging markets.
Later, academic researchers identified more plausible reasons why the US might be able to run large
deficits
without great risk, as long as investors’ desire for diversification, safety, and liquidity sustained global demand for US assets.
But policymakers should have recognized that even these better rationales had limits, and that massive sustained current-account
deficits
are often a blinking red signal of deeper problems – in this case, over-borrowing by households to finance home purchases.
In the case of Germany, of course, we are talking about surpluses, not
deficits.
And even though the surpluses exceed 6% of German national income and would seem to be on the same order of magnitude as pre-crisis US deficits, one must remember that the German economy is less than a quarter the size of the US (at market exchange rates).
Keynesians look at these surpluses and say that the northern European countries should drive them down by running much larger fiscal
deficits
to boost domestic demand.
Many studies have shown that changes in private savings and investment tend to offset partly the current-account effects of higher fiscal
deficits.
For example, larger German fiscal
deficits
would hardly have been a decisive factor in Europe.
So
deficits
grow.
Financial-sector deficit hawks said that governments should focus on eliminating deficits, preferably by cutting back on expenditures.
The reduced
deficits
would restore confidence, which would restore investment – and thus growth.
In Europe, especially Germany, and in some quarters in the US, as government
deficits
and debt grow, so, too, do calls for increased austerity.
Stimulus spending, the deficit hawks’ favorite bogeyman, did not cause most of the increased
deficits
and debt, which are the result of “automatic stabilizers” – the tax cuts and spending increases that automatically accompany economic fluctuations.
Low interest rates meant that
deficits
could be financed by floating bonds.
And for China now, as for Japan then, the undercurrent for these discussions is US frustration with bilateral current-account
deficits.
The surpluses and
deficits
grow larger during the upturn, and the burden of adjustment falls disproportionately on debtors during the downturn, leading to a debt-deflationary process that takes root in the deficit regions before dampening demand everywhere.
Once established, the ICU would tax persistent surpluses and
deficits
symmetrically, to annul the negative feedback mechanism between unbalanced capital flows, volatility, inadequate global aggregate demand, and unnecessary unemployment distributed unevenly around the world.
Reversing the upsurge in fiscal
deficits
is also critical to the global economy’s health.
While the fiscal stimulus packages enacted in the past two years have been helpful in achieving the current rise in economic activity, the path of future
deficits
can do substantial damage to long-run growth.
And the
deficits
run up during the intervening decade would cause the national debt to double, rising to more than 80% of GDP.
Such large fiscal
deficits
would mean that the government must borrow funds that would otherwise be available for private businesses to finance investment in productivity-enhancing plant and equipment.
Moreover, the
deficits
would mean higher interest rates and continued international imbalances.
In contrast to monetary policy, the US president does have a powerful and direct impact on future fiscal
deficits.
Unfortunately, Obama shows no real interest in reducing
deficits.
Add to this the pledge not to raise taxes on anyone earning less than $250,000 and you have a recipe for large fiscal
deficits
as long as this president can serve.
The true believers view the
deficits
as evidence that the world recognizes how special the US is and wants to buy in.
The data show that countries with saving
deficits
tend to run trade deficits, while those with saving surpluses tend to run trade surpluses.
The United States is the most obvious example, with a net national saving rate of 2.6% in late 2015 – less than half the 6.3% average in the final three decades of the twentieth century – and trade
deficits
with 101 countries.
The United Kingdom, Canada, Finland, France, Greece, and Portugal – all of which have large trade
deficits
– save much less than other developed countries.
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