U.S. Current Account Deficit

For the past two and a half decades , there has been a deficit in our economy . There are several reasons for this

Firstly , the United .States is addicted to foreign oil . In 2000 approximately 120 .2 billion dollars worth of oil and petroleum were imported . Ever since 1975 , imports have exceeded exports , thus putting the US in a trade deficit . This was about the time the energy crisis began , when there was a shortage of natural gas and oil , so we had to acquire it elsewhere , specifically the Middle East

There is

also a trade deficit with China . China is a communist country and depresses the value of their currency-yuan . Imports are cheap for U .S . but China is our only leverage over North Korea

American society is mainly an affluent society . We expect to have what we want when we want it for example , produce . There is also a widespread appetite for foreign delicacies , making us a net importer of food . We import foreign food at an inflated price beyond what we grow In 2002 , the US exported 1 .2 billion dollars worth of animals and plant products , whereas the import level was 8 .7 billion

Interests rates are being driven up dramatically because we borrow too much from other nations . Federal budget deficits are astounding . Foreign countries are buying the U .S . debt and investing their dollars in the U .S . and could collapse the market by flooding the market with dollars if they wanted to

The current account deficit is a major problem . As this article previously stated , the United States simply borrows too much from other nations

Due to the war on terror , the United States has had to invest greater and greater amounts of money on its military ,leaving lessa vailable for other aspects of the nation , such as education , health care and infrastructure

`Real gross private domestic investment fell at a double-digit annual rate (roughly 12 percent ) in each of the first two quarters of 2001 - the steepest

decline in investment spending in a decade (Chart 1-3 . The year began with

a sizable inventory liquidation , which accounted for most of the decline

in gross private domestic investment in the first quarter and subtracted

2 .6 percentage points from the growth rate of real GDP (2002 Economic Report to the President

How is the current account related to a country 's business cycle ? Simply put , eonomic reasoning . It has limitations . In theory , when economic situation worsens , currency should be flat . Imports are more expensive and exports cheaper . All things equal we like this . Floating currency which is currency whose value is adjustable , helps regulate the country 's economy . We are capitalistic and prone to good investment People are placing money back into the U .S

Overall , the current account can be measured by taking the diffence between revenue and debt

Although there are repayment issues of debts , the US makes reparations by creating repayment plans to its lender nations...