Understanding Trade Deficits

so you might have heard some people talk

about the United States trade deficit

I'm ordering the first-ever

comprehensive review of America's trade

deficits and all violations of trade

rules that harm the United States and

the workers of the United States anyway

trade deficit just means that when you

compare how much the u.s. is buying from

the world how much the world buys from

the US there's an imbalance like we're

buying more from the world than the

world is buying from us well a trade

deficit sounds scary because you think

of a trade deficit in terms of like me

and you and our bank accounts and our

wallets right it's as if you're like

shelling out money and eventually you're

going to be broke right I mean that's

how it work if it was just you know your

mom but countries are very different

there have been countries in the history

of the world who have decided that they

don't want to trade and so they try and

make everything in their own borders

that was a disaster for them you want to

know the best example North Korea North

Korea trades almost nothing with anyone

and they are pretty much screwed because

of it so I'm going to be the u.s. for a

second what they I have a trade deficit

because I am sending a bunch of money

out there to buy Twinkie

I'm Twinkie crazy and buying Twinkies

from the rest of the world but the rest

of the world they're not buying much of

anything for me

I have a trade deficit I'm buying

Twinkies they're buying nothing if that

kept happening then eventually like I

would just have no more money like I

would just be throwing my money to the

rest of the world right that's not

happening the reason is because all that

money for Twinkies I keep sending out

it's coming back in the form of

investment so that could be a German

company opening a plant in South

Carolina a Brazilian real estate firm

buying a skyscraper in Manhattan the

Chinese government buying a bunch of

Treasury bills from the US government

the point is is that that money is

coming back and we know that it is

because we can see it coming back but

this whole concept of like all we're

losing is we have a trade deficit it

doesn't help anybody