Bilateral ‘Trade Deficits’ and Money

by Don Boudreaux on July 20, 2022

in Balance of Payments, Trade

Cafe Hayek reader “Camper” – prompted by my recent letter on Robert Lighthizer’s latest exhibition of economic nonsense – sent to me the following e-mail. I share it with Camper’s kind permission. Camper’s observation is spot-on and brilliant – indeed, it’s downright Bastiatian. I wish that I’d have thought of it, but am delighted that Camper did!

Maybe remind Mr. Lighthizer that if bilateral trade deficits are harmful, then the use of money itself is harmful and we should return to a two-way barter economy?

A market with money is a market with continually recurring bilateral trade deficits. Every sale of current goods adds to the trade deficit of the buyer.

Cheers,
Camper

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