The trade deficit is largely a result of our strong growth. The matching capital inflow is prompted not only by the need to finance the trade deficit but also by the United States' attractiveness as a good place for the world's investors to invest. It's not clear to me whether the capital inflow is financing the trade deficit or the trade deficit is financing the capital inflow. The answer, of course, is both. But it isn't clear which is dominant.
People are naturally uneasy about it because it seems unnatural.
The pattern of our balance of payments resembles that of a developing nation rather than the pattern we would normally associate with a mature, rich country. Not an underdeveloped country, but a developing country. Earlier this year, I testified before the U.S. Trade Deficit Review Commission. You may guess right, but you don't know because no one keeps statistics on interstate trade. If Texas and Oklahoma had their own currencies, we don't know which would be the stronger and which would be the weaker.