Finally, recent hysteria over the U.S. trade deficit is completely unwarranted. Bearish economic banshees are on the loose again, arguing that trade deficits will weaken the dollar and drive up interest rates. This of course will collapse the stock market and force the economy off the recessionary cliff. And then perpetually pessimistic Keynesian demand-siders will finally be proven right after all. Aha, I told you so.
Prosperity is doomed.
Not so fast fellas. The U.S. trade position has been in deficit for nearly twenty consecutive years. But the economic results have been splendid. All this while the big, bad, evil trade deficit continues. Imports have grown faster than exports because the U.S. economy has consistently grown faster than the rest of the world.