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Bernanke solves the wrong deficit

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opednews.com Headlined to H4 10/20/09

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Federal Reserve chairman Ben Bernanke recognized today that America's trade deficit played a central role in the global economic crisis. Then after he recognized the problem, he went on to solve a different one.

Start with the real problem, America's trade deficit. America is spending more than it earns, and buying more than it's selling. Our trade deficit in 2008 was $706 billion.

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We know we're addicted to oil. We're also addicted to cheap stuff imported from China (made cheap by devalued currency and near-zero workplace or environmental protections). America's problem is a huge efflux of dollars, as our wealth departs for foreign lands.

The Asian export tigers have a smaller problem, but they have one too -- an excessive reliance on excessive American consumption. The danger is, in Bernanke's own words, "ever-increasing and unsustainable imbalances in trade and capital flows."

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So America has a trade deficit. The world has an unsustainable imbalance. That's ungood.

Bernake's solution to this trade deficit? Reduce the federal budget deficit.

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If you listen quickly, it may sound like reducing a deficit to reduce the deficit. But listen carefully. Bernanke wants to reduce a different deficit.

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Eric Lotke has cooked in five-star restaurants and flushed every toilet in the Washington D.C. jail. He has filed headline lawsuits and published headline research on crime, prisons, and sex offenses. His most recent book is Making Manna.

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