By Gary North There are two deficits that we hear about most: the federal government's deficit and the balance of payments of the United States. They are linked, but they are very different in their effects.
The federal deficit is seen by Keynesians as mostly a benefit and by Austrians as mostly a liability, and for the same reason: higher government spending.
The balance-of-payments deficit is seen by virtually all economists as a benefit for Americans and their creditors. Otherwise, the exchanges would not take place.
At some point, the twin deficits will become unsustainable. Then the debtors will have a choice: either default or else adopt a systematic reversal of policies: debt repayment. This means a federal-budget surplus and a balance-of-payments surplus. Balanced budgets won't do it. There will have to be surpluses.
That day is coming. That will be the day of reckoning — of counting up.
The participants give no indications that they believe that day is coming.
Neither did Greece's politicians in early 2010… (Read more)
Source: Mises.org
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