I have been having an argument with some ignoramous on the effect of trade deficits on the economy. I have told them that US Dollars can only be spent in the United States and in that way the money always has to come back to the US no matter what. However i would like to ask if the US government’s balance of payments include foreign investment in imports…because according to the people that i am debating with, tourism is including in the balance of payments. Which i originally thought was the invisible way that money was comming back into our economy. My only other theory is foreign investment.. Is this the way that the money is comming back into our economy?..otherwise the only other possible explanation would be that the money is being used abroad for exchanges…or people are just simply hoarding the money..(which is illogical)
The US is the world’s hardest currency. US dollars outside our borders dont need to come back here. Other nations can trade the US dollar for payments without having to come here in the first place. There are almost twice as more money circulating abroad than circulating in the US. This can only happen because it is an international currency.
Regarding the your balance of payments question; I think it is taking into account. How well is it taken into account??? No one audits the US economic data.
aww fascinating so it does matter that we have a 700 billion dollar deficit as the money doesnt come back…but then again we tax the world through inflation
United States dollars are the most frequently used for black market operations because they are the safest.