Trade deficit - And safest way to invest dollars is buying...

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Trade deficit is dollars that all foreign countries made from selling stuff to the US, and have not spent on buying things from the US. So they are "keeping" those dollars. Since it is stupid to just let these dollars sit in a checking account, they want to get some interest in them, and in the safest way possible
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Unformatted text preview: . And safest way to invest dollars is buying US government bonds, i.e. lend money toUS government. US government lends when it needs to cover budget deficit, i.e. when it spends more money than it receives in taxes. So trade deficit makes it easier for US government to run a budget deficit....
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