Written By Basilio Chen

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 This is good for many especially President Obama who is running for re-election.  In 2006, unseen to the naked eye, the USA was heading into a substantial disaster.  The Trade Inbalance with the outside world including oil but all imports combined.  The 2009 Financial Crisis may have been bad for some but it has temporarily solved a bit problem, the Trade Imbalance is reduced by 1/2 (excluding oil) and we even can consider that the trend is now reversed.

From the chart below, we can see that the USA has been running an increasing trade deficit for the best part of the last decade, right until the crisis when global trade collapsed. Deficit widened as the economy recovers, but it is no where near the pre-crisis level.

imageSource: BEA

More important in this chart, is that if oil is excluded from the trade balance, US trade deficit is now only half of the pre-crisis peak. Non-oil trade deficit started declining back in 2006 when it hit the rate of about US$43 billion a month. Currently, US trade deficit is roughly US$21 billion a month, if you exclude oil – that’s a 50%  change for the better of the USA.

So this makes the USA be in a more stable favorable economic situation.  At what cost, middle class and savers have been practically reduced by the same amount.  The rich got richer and the poor became bigger in numbers.  The government with the big corporations also became a lot bigger and stronger.  All in all, it was a smart move.  Sacrifice the people so that the country can live.  Long live the United States of America!

The next step is to reduce the IOU’s from foreigners.  That will happen after 2014 when inflation takes a natural toll in reducing the relative value of the IOU’s.  For example, since the USA owes about $ 4 Trillion, an inflation of 20% would make the relative value of the IOU down by that percentage.  And increasing taxes will have a double gain because the higher percentage of taxes will be on higher employment salaries that have been increased by inflated labor from inflation.  So the balance sheet of the USA is great and the bankers who financed all this are all even happier.

As a matter of fact, if this trend continues, there may not be need for more or bigger wars.  Inflation is an invisible force and nobody will be to be blamed.