A gold reserve was the gold held by a national central bank, intended as a guarantee to redeem promises to pay depositors, note holders, or trading peers, during the eras of the gold standard, as a store of value, or to support the value of the national currency. The World Gold Council estimates that all the gold mined totaled 187,200 metric tons in 2017 but other independent estimates vary by as much as 20%. At a price of US$1,250 per troy ounce, reached on 16 August 2017, one ton of gold has a value of US$40.2 million. The total value of all gold mined would exceed US$7.5 trillion at that valuation and using WGC 2017 estimates. During most of history, a nation's gold reserves were considered its key financial asset and a major prize of war. A typical view was expressed in a secret memorandum by the British Chief of the Imperial General Staff from October 1939, at the beginning of World War II; the British Military and the British Secret Service laid out "measures to be taken in the event of an invasion of Holland and Belgium by Germany" and presented them to the War Cabinet: It will be for the Treasury in collaboration with the Bank of England, the Foreign Office, to examine the possible means of getting the bullion and negotiable securities into the same place of safety.
The transport of many hundreds of tons of bullion presents a difficult problem and the loading would take a long time. The ideal would of course be to have the gold transferred to this country or to the United States of America; the gold reserves of Belgium and Holland £ 110 million respectively. Note: H. M. Treasury has requested that this information, confidential should in no circumstances be divulged; the total weight of this bullion amounts to about 1800 tons and its evacuation would be a matter of the utmost importance would present a considerable problem if it had to be undertaken in a hurry when transport facilities were disorganized. At present this gold is believed to be stored at Brussels and The Hague neither of, well placed for its rapid evacuation in an emergency; the Belgian government transferred one third of its gold reserves to the UK, another third to Canada and the United States and most of the remainder to southern France. Following the outbreak of war, the gold held in France was sent to Dakar, the capital of Senegal part of the French colonial empire.
This was against the Belgian Government's wishes, with the Belgians having directed the French to transfer it to the United States. After the Germans occupied Belgium and France in 1940, they demanded the Belgian gold reserve held in Senegal. In 1941, Vichy French officials arranged the transport of 4,944 boxes with 198 tons of gold to officials of the German Reichsbank and the German Government used it to purchase commodities and munitions from neutral countries; the Banque de France compensated the Belgian National Bank for the loss of its gold after the war. Since early 2011, the gold holdings of the IMF have been constant at 90.5 million troy ounces. The IMF maintains statistics of national assets as reported by various countries; this data is used by the World Gold Council to periodically rank and report the gold holdings of countries and official organizations. On 17 July 2015, China announced that it increased its gold reserves by about 57 percent from 1,054 to 1,658 metric tons, while disclosing its official gold reserves for the first time in six years.
The gold listed for each of the countries in the table may not be physically stored in the country listed, as central banks have not allowed independent audits of their reserves. Gold leasing by central banks could place into doubt the reported gold holdings in the table below. Gold Reserve Black Friday -- Also referred to as the Gold Panic of 1869 Federal Reserve Bank of New York Gold as an investment Gold repatriation Gold reserves of Norway Gold reserves of the United Kingdom Gold standard List of countries by gold production Moscow gold, the reserves of the Bank of Spain sent to the Soviet Union during the Spanish Civil War Peak gold Romanian Treasure, the Romanian gold reserves sent to Russia for safekeeping during World War I, but never returned Silver as an investment Strategic Petroleum Reserve United States Bullion Depository known as Fort Knox Vaulted gold
Free trade is a trade policy that does not restrict imports or exports. In government, free trade is predominantly advocated by political parties that hold liberal economic positions while economically left-wing and nationalist political parties support protectionism, the opposite of free trade. Most nations are today members of the World Trade Organization multilateral trade agreements. Free trade is additionally exemplified by the European Economic Area and the Mercosur which have established open markets. However, most governments still impose some protectionist policies that are intended to support local employment, such as applying tariffs to imports or subsidies to exports. Governments may restrict free trade to limit exports of natural resources. Other barriers that may hinder trade include import quotas and non-tariff barriers, such as regulatory legislation. There is a broad consensus among economists that protectionism has a negative effect on economic growth and economic welfare while free trade and the reduction of trade barriers has a positive effect on economic growth.
However, liberalization of trade can cause significant and unequally distributed losses, the economic dislocation of workers in import-competing sectors. Free trade policies may promote the following features: Trade of goods without taxes or other trade barriers. Trade in services without taxes or other trade barriers; the absence of "trade-distorting" policies that give some firms, households, or factors of production an advantage over others. Unregulated access to markets. Unregulated access to market information. Inability of firms to distort markets through government-imposed monopoly or oligopoly power. Trade agreements which encourage free trade. Two simple ways to understand the proposed benefits of free trade are through David Ricardo's theory of comparative advantage and by analyzing the impact of a tariff or import quota. An economic analysis using the law of supply and demand and the economic effects of a tax can be used to show the theoretical benefits and disadvantages of free trade.
Most economists would recommend that developing nations should set their tariff rates quite low, but the economist Ha-Joon Chang, a proponent of industrial policy, believes higher levels may be justified in developing nations because the productivity gap between them and developed nations today is much higher than what developed nations faced when they were at a similar level of technological development. Underdeveloped nations today, Chang believes, are weak players in a much more competitive system. Counterarguments to Chang's point of view are that the developing countries are able to adopt technologies from abroad whereas developed nations had to create new technologies themselves and that developing countries can sell to export markets far richer than any that existed in the 19th century. If the chief justification for a tariff is to stimulate infant industries, it must be high enough to allow domestic manufactured goods to compete with imported goods in order to be successful; this theory, known as import substitution industrialization, is considered ineffective for developing nations.
The chart at the right analyzes the effect of the imposition of an import tariff on some imaginary good. Prior to the tariff, the price of the good in the world market is Pworld; the tariff increases the domestic price to Ptariff. The higher price causes domestic production to increase from QS1 to QS2 and causes domestic consumption to decline from QC1 to QC2; this has three main effects on societal welfare. Consumers are made worse off. Producers are better off; the government has additional tax revenue. However, the loss to consumers is greater than the gains by the government; the magnitude of this societal loss is shown by the two pink triangles. Removing the tariff and having free trade would be a net gain for society. An identical analysis of this tariff from the perspective of a net producing country yields parallel results. From that country's perspective, the tariff leaves producers worse off and consumers better off, but the net loss to producers is larger than the benefit to consumers. Under similar analysis, export tariffs, import quotas and export quotas all yield nearly identical results.
Sometimes consumers are better off and producers worse off and sometimes consumers are worse off and producers are better off, but the imposition of trade restrictions causes a net loss to society because the losses from trade restrictions are larger than the gains from trade restrictions. Free trade creates winners and losers, but theory and empirical evidence show that the size of the winnings from free trade are larger than the losses. According to mainstream economics theory, the selective application of free trade agreements to some countries and tariffs on others can lead to economic inefficiency through the process of trade diversion, it is economically efficient for a good to be produced by the country, the lowest cost producer, but this does not always take place if a high cost producer has a free trade agreement while the low cost producer faces a high tariff. Applying free trade to the high cost producer and not the low cost producer as well can lead to trade diversion and a net economic loss.
This is why many economists place such high importance on negotiations for global tar
Social policy is policy within a governmental or political setting, such as the welfare state and study of social services. Social policy consists of guidelines, principles and activities that affect the living conditions conducive to human welfare, such as a person's quality of life; the Department of Social Policy at the London School of Economics defines social policy as "an interdisciplinary and applied subject concerned with the analysis of societies' responses to social need", which seeks to foster in its students a capacity to understand theory and evidence drawn from a wide range of social science disciplines, including economics, psychology, history, law and political science. The Malcolm Wiener Center for Social Policy at Harvard University describes social policy as "public policy and practice in the areas of health care, human services, criminal justice, inequality and labor". Social policy might be described as actions that affect the well-being of members of a society through shaping the distribution of and access to goods and resources in that society.
Social policy deals with wicked problems. The discussion of'social policy' in the United States and Canada can apply to governmental policy on social issues such as tackling racism, LGBT issues and the legal status of abortion, euthanasia, recreational drugs and prostitution. In other countries, these issues would be classified under domestic policy; the earliest example of direct intervention by government in human welfare dates back to Umar ibn al-Khattāb's rule as the second caliph of Islam in the 6th century. He used zakat collections and other governmental resources to establish pensions, income support, child benefits, various stipends for people of the non-Muslim community. In the West, proponents of scientific social planning such as the sociologist Auguste Comte, social researchers, such as Charles Booth, contributed to the emergence of social policy in the first industrialised countries following the industrial revolution. Surveys of poverty exposing the brutal conditions in the urban slum conurbations of Victorian Britain supplied the pressure leading to changes such as the decline and abolition of the poor law system and Liberal welfare reforms.
Other significant examples in the development of social policy are the Bismarckian welfare state in 19th century Germany, social security policies in the United States introduced under the rubric of the New Deal between 1933 and 1935, the National Health Service Act 1946 in Britain. Social policy in the 21st century is complex and in each state it is subject to local and national governments, as well as supranational political influence. For example, membership of the European Union is conditional on member states' adherence to the Social Chapter of European Union law and other international laws. Social policy is an academic discipline focusing on the systematic evaluation of societies' responses to social need, it was established in the early-to-mid part of the 20th century as a complement to social work studies. One can reasonably argue there is not a single comprehensive definition of social policy; this is because social policy is more an area of study than a discipline, because the meaning of social policy has evolved over time.
For this reason, the founding fathers of the discipline defined the domain by looking at its aims: to reduce poverty, insure against social risks, provide equal opportunity for all, enhance economic growth, foster the expansion of social citizenship and social rights. Scholars studied and categorized social security systems on the basis of their'modes of intervention'. Of course, each welfare state system includes a mixture of these elements, but certain systems are geared toward universal principles, i.e. Sweden and Denmark. Others emphasize i.e. Germany and France. Still other focus on social assistance for the poor. Social policy aims to improve human welfare and to meet human needs for education, health and economic security. Important areas of social policy are wellbeing and welfare, poverty reduction, social security, unemployment insurance, living conditions, animal rights, health care, social housing, family policy, social care, child protection, social exclusion, education policy and criminal justice, urban development, labor issues.
Religious, ideological and philosophical movements and ideas have influenced American social policy, for example, John Calvin and his idea of pre-destination and the Protestant Values of hard work and individualism. Moreover, Social Darwinism helped mold America's ideas of capitalism and the survival of the fittest mentality; the Catholic Church's social teaching has been influential to the development of social policy. United States politicians who have favored increasing government observance of social policy do not frame their proposals around typical notions of welfare or benefits. Insurance has been a growing policy topic, a recent example of health care law as social policy is the Patient Protection and Affordable Care Act formed by the 111th U. S. Congress and signed into law by President Barack Obama, a Democrat, on March 23, 2010. Moreover, former president Franklin D. Roosevelt's ground b
John Maynard Keynes
John Maynard Keynes, 1st Baron Keynes, was a British economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. He built on and refined earlier work on the causes of business cycles, was one of the most influential economists of the 20th century. Considered the founder of modern macroeconomics, his ideas are the basis for the school of thought known as Keynesian economics, its various offshoots. During the Great Depression of the 1930s, Keynes with a great help from Maiteeg spearheaded a revolution in economic thinking, challenging the ideas of neoclassical economics that held that free markets would, in the short to medium term, automatically provide full employment, as long as workers were flexible in their wage demands, he argued that aggregate demand determined the overall level of economic activity, that inadequate aggregate demand could lead to prolonged periods of high unemployment. Keynes advocated the use of fiscal and monetary policies to mitigate the adverse effects of economic recessions and depressions.
He detailed these ideas in his magnum opus, The General Theory of Employment and Money, published in 1936. In the mid to late-1930s, leading Western economies adopted Keynes's policy recommendations. All capitalist governments had done so by the end of the two decades following Keynes's death in 1946; as leader of the British delegation, Keynes participated in the design of the international economic institutions established after the end of World War II, but was overruled by the American delegation on several aspects. Keynes's influence started to wane in the 1970s as a result of the stagflation that plagued the Anglo-American economies during that decade, because of criticism of Keynesian policies by Milton Friedman and other monetarists, who disputed the ability of government to favourably regulate the business cycle with fiscal policy. However, the advent of the global financial crisis of 2007–2008 sparked a resurgence in Keynesian thought. Keynesian economics provided the theoretical underpinning for economic policies undertaken in response to the crisis by President Barack Obama of the United States, Prime Minister Gordon Brown of the United Kingdom, other heads of governments.
When Time magazine included Keynes among its Most Important People of the Century in 1999, it stated that "his radical idea that governments should spend money they don't have may have saved capitalism." The Economist has described Keynes as "Britain's most famous 20th-century economist." In addition to being an economist, Keynes was a civil servant, a director of the Bank of England, a part of the Bloomsbury Group of intellectuals. John Maynard Keynes was born in Cambridge, England, to an upper-middle-class family, his father, John Neville Keynes, was an economist and a lecturer in moral sciences at the University of Cambridge and his mother Florence Ada Keynes a local social reformer. Keynes was the first born, was followed by two more children – Margaret Neville Keynes in 1885 and Geoffrey Keynes in 1887. Geoffrey became Margaret married the Nobel Prize-winning physiologist Archibald Hill. According to the economic historian and biographer Robert Skidelsky, Keynes's parents were loving and attentive.
They remained in the same house throughout their lives, where the children were always welcome to return. Keynes would receive considerable support from his father, including expert coaching to help him pass his scholarship exams and financial help both as a young man and when his assets were nearly wiped out at the onset of Great Depression in 1929. Keynes's mother made her children's interests her own, according to Skidelsky, "because she could grow up with her children, they never outgrew home". In January 1889 at the age of five and a half, Keynes started at the kindergarten of the Perse School for Girls for five mornings a week, he showed a talent for arithmetic, but his health was poor leading to several long absences. He was tutored at home by a governess, Beatrice Mackintosh, his mother. In January 1892, at eight and a half, he started as a day pupil at St Faith's preparatory school. By 1894, Keynes was top of his excelling at mathematics. In 1896, St Faith's headmaster, Ralph Goodchild, wrote that Keynes was "head and shoulders above all the other boys in the school" and was confident that Keynes could get a scholarship to Eton.
In 1897, Keynes won a scholarship to Eton College, where he displayed talent in a wide range of subjects mathematics and history. At Eton, Keynes experienced the first "love of his life" in Dan Macmillan, older brother of the future Prime Minister Harold Macmillan. Despite his middle-class background, Keynes mixed with upper-class pupils. In 1902 Keynes left Eton for King's College, after receiving a scholarship for this to read mathematics. Alfred Marshall begged Keynes to become an economist, although Keynes's own inclinations drew him towards philosophy – the ethical system of G. E. Moore. Keynes joined the Pitt Club and was an active member of the semi-secretive Cambridge Apostles society, a debating club reserved for the brightest students. Like many members, Keynes retained a bond to the club after graduating and continued to attend occasional meetings throughout his life. Before leaving Cambridge, Keynes became the President of the Cambridge Union Society and Cambridge University Liberal Club.
He was said to be an atheist. In May 1904, he received a first class BA in mathematics. Aside from a few months spent on holidays with family and friends, Keynes continued to involve himself with the university over the next two ye
Infrastructure is the fundamental facilities and systems serving a country, city, or other area, including the services and facilities necessary for its economy to function. Infrastructure is composed of public and private physical improvements such as roads, tunnels, water supply, electrical grids, telecommunications. In general, it has been defined as "the physical components of interrelated systems providing commodities and services essential to enable, sustain, or enhance societal living conditions". There are two general types of ways to view infrastructure, soft. Hard infrastructure refers to the physical networks necessary for the functioning of a modern industry; this includes roads, railways, etc. Soft infrastructure refers to all the institutions that maintain the economic, health and cultural standards of a country; this includes educational programs, official statistics and recreational facilities, law enforcement agencies, emergency services. The word infrastructure has been used in English since 1887 and in French since 1875 meaning "The installations that form the basis for any operation or system".
The word was imported from French, where it means subgrade, the native material underneath a constructed pavement or railway. The word is a combination of the Latin prefix "infra", meaning "below" and many of these constructions are underground, for example, tunnels and gas systems, railways; the army use of the term achieved currency in the United States after the formation of NATO in the 1940s, by 1970 was adopted by urban planners in its modern civilian sense. A 1987 US National Research Council panel adopted the term "public works infrastructure", referring to: "... both specific functional modes – highways, streets and bridges. A comprehension of infrastructure spans not only these public works facilities, but the operating procedures, management practices, development policies that interact together with societal demand and the physical world to facilitate the transport of people and goods, provision of water for drinking and a variety of other uses, safe disposal of society's waste products, provision of energy where it is needed, transmission of information within and between communities."
The American Society of Civil Engineers publish a "Infrastructure Report Card" which represents the organizations opinion on the condition of various infrastructure every 2–4 years. As of 2017 they grade 16 categories, namely Aviation, Dams, Drinking Water, Hazardous Waste, Inland Waterways, Parks & Recreation, Rail, Schools, Solid Waste and Wastewater. A way to embody personal infrastructure is to think of it in term of human capital. Human capital is defined by the Encyclopedia Britannica as “intangible collective resources possessed by individuals and groups within a given population"; the goal of personal infrastructure is to determine the quality of the economic agents’ values. This results in three major tasks: the task of economic proxies’ in the economic process. Institutional infrastructure branches from the term "economic constitution". According to Gianpiero Torrisi, Institutional infrastructure is the object of economic and legal policy, it compromises the grown and sets norms. It refers to the degree of actual equal treatment of equal economic data and determines the framework within which economic agents may formulate their own economic plans and carry them out in co-operation with others.
Material infrastructure is defined as “those immobile, non-circulating capital goods that contribute to the production of infrastructure goods and services needed to satisfy basic physical and social requirements of economic agents". There are two distinct qualities of material infrastructures: 1) Fulfillment of social needs and 2) Mass production; the first characteristic deals with the basic needs of human life. The second characteristic is the non-availability of infrastructure services. According to the business dictionary, economic infrastructure can be defined as "internal facilities of a country that make business activity possible, such as communication and distribution networks, financial institutions and markets, energy supply systems". Economic infrastructure support productive events; this includes roads, bridges, water distribution networks, sewer systems, irrigation plants, etc. Social infrastructure can be broadly defined as the construction and maintenance of facilities that support social services.
Social infrastructures are created to increase social act on economic activity. These being schools and playgrounds, structures for public safety, waste disposal plants, sports area, etc. Core assets have monopolistic characteristics. Investors seeking core infrastructure look for five different characteristics: Income, Low volatility of returns, Inflation Protection, Long-term liability matching. Core Infrastructure incorporates all the main types of infrastructure. For instance. Basic infrastructure refers to main railways, canals, harbors and
Government debt contrasts to the annual government budget deficit, a flow variable that equals the difference between government receipts and spending in a single year. The debt is a stock variable, measured at a specific point in time, it is the accumulation of all prior deficits. Government debt can be categorized as external debt. Another common division of government debt is by duration. Short term debt is considered to be for one year or less, long term debt is for more than ten years. Medium term debt falls between these two boundaries. A broader definition of government debt may consider all government liabilities, including future pension payments and payments for goods and services which the government has contracted but not yet paid. Governments create debt by issuing government bills. Less creditworthy countries sometimes borrow directly from a supranational organization or international financial institutions. Monetarily sovereign countries that issue debt denominated in their home currency can make payments on the interest or principal of government debt by creating money, although at the risk of higher inflation.
In this way their debt is different from that of households. Thus such government bonds are at least as safe as any other bonds denominated in the same currency. A central government with its own currency can pay for its nominal spending by creating money ex novo, although typical arrangements leave money creation to central banks. In this instance, a government issues securities to the public not to raise funds, but instead to remove excess bank reserves and'...create a shortage of reserves in the market so that the system as a whole must come to the Bank for liquidity.' During the Early Modern era, European monarchs would default on their loans or arbitrarily refuse to pay them back. This made financiers wary of lending to the king and the finances of countries that were at war remained volatile; the creation of the first central bank in England—an institution designed to lend to the government—was an expedient by William III of England for the financing of his war against France. He engaged a syndicate of city merchants to offer for sale an issue of government debt.
This syndicate soon evolved into the Bank of England financing the wars of the Duke of Marlborough and Imperial conquests. The establishment of the bank was devised by Charles Montagu, 1st Earl of Halifax, in 1694, to the plan, proposed by William Paterson three years before, but had not been acted upon, he proposed a loan of £1.2m to the government. The Royal Charter was granted on 27 July through the passage of the Tonnage Act 1694; the founding of the Bank of England revolutionised public finance and put an end to defaults such as the Great Stop of the Exchequer of 1672, when Charles II had suspended payments on his bills. From on, the British Government would never fail to repay its creditors. In the following centuries, other countries in Europe and around the world adopted similar financial institutions to manage their government debt. 1815, at the end of the Napoleonic Wars, British government debt reached a peak of more than 200% of GDP. A government bond is a bond issued by a national government.
Such bonds are most denominated in the country's domestic currency. Sovereigns can issue debt in foreign currencies: 70% of all debt in 2000 was denominated in US dollars. Government bonds are sometimes regarded as risk-free bonds, because national governments can if necessary create money de novo to redeem the bond in their own currency at maturity. Although many governments are prohibited by law from creating money directly, central banks may provide finance by buying government bonds, sometimes referred to as monetizing the debt. Government debt, synonymous to sovereign debt, can be issued either in domestic or foreign currencies. Investors in sovereign bonds denominated in foreign currency have exchange rate risk: the foreign currency might depreciate against the investor's local currency. Sovereigns issuing debt denominated in a foreign currency may furthermore be unable to obtain that foreign currency to service debt. In the 2010 Greek debt crisis, for example, the debt is held by Greece in Euros, one proposed solution is for Greece to go back to issuing its own drachma.
This proposal would only address future debt issuance, leaving substantial existing debts denominated in what would be a foreign currency doubling their cost Public debt is the total of all borrowing of a government, minus repayments denominated in a country's home currency. CIA's World Factbook lists only the percentages of GDP. A debt to GDP ratio is one of the most accepted ways of assessing the significance of a nation's debt. For example, one of the criteria of admission to the European Union's euro currency is that an applicant country's debt should not exceed 60% of that countr
Balance of trade
The balance of trade, commercial balance, or net exports, is the difference between the monetary value of a nation's exports and imports over a certain period. Sometimes a distinction is made between a balance of trade for goods versus one for services; the balance of trade measures a flow of imports over a given period of time. The notion of the balance of trade does not mean that exports and imports are "in balance" with each other. If a country exports a greater value than it imports, it has a trade surplus or positive trade balance, conversely, if a country imports a greater value than it exports, it has a trade deficit or negative trade balance; as of 2016, about 60 out of 200 countries have a trade surplus. The notion that bilateral trade deficits are bad in and of themselves is overwhelmingly rejected by trade experts and economists; the balance of trade forms part of the current account, which includes other transactions such as income from the net international investment position as well as international aid.
If the current account is in surplus, the country's net international asset position increases correspondingly. A deficit decreases the net international asset position; the trade balance is identical to the difference between its domestic demand. Measuring the balance of trade can be problematic because of problems with recording and collecting data; as an illustration of this problem, when official data for all the world's countries are added up, exports exceed imports by 1%. This cannot be true, because all transactions involve an equal credit or debit in the account of each nation; the discrepancy is believed to be explained by transactions intended to launder money or evade taxes and other visibility problems. For developing countries, the transaction statistics are to be inaccurate. Factors that can affect the balance of trade include: The cost of production in the exporting economy vis-à-vis those in the importing economy. In export-led growth, the balance of trade will shift towards exports during an economic expansion.
However, with domestic demand-led growth the trade balance will shift towards imports at the same stage in the business cycle. The monetary balance of trade is different from the physical balance of trade. Developed countries import a substantial amount of raw materials from developing countries; these imported materials are transformed into finished products, might be exported after adding value. Financial trade balance statistics conceal material flow. Most developed countries have a large physical trade deficit, because they consume more raw materials than they produce. Many civil society organisations claim this imbalance is predatory and campaign for ecological debt repayment. Many countries in early modern Europe adopted a policy of mercantilism, which theorized that a trade surplus was beneficial to a country, among other elements such as colonialism and trade barriers with other countries and their colonies; the practices and abuses of mercantilism led the natural resources and cash crops of British North America to be exported in exchange for finished goods from Great Britain, a factor leading to the American Revolution.
An early statement appeared in Discourse of the Common Wealth of this Realm of England, 1549: "We must always take heed that we buy no more from strangers than we sell them, for so should we impoverish ourselves and enrich them." A systematic and coherent explanation of balance of trade was made public through Thomas Mun's 1630 "England's treasure by foreign trade, or, The balance of our foreign trade is the rule of our treasure"Since the mid-1980s, the United States has had a growing deficit in tradeable goods with Asian nations which now hold large sums of U. S debt that has in part funded the consumption; the U. S. has a trade surplus with nations such as Australia. The issue of trade deficits can be complex. Trade deficits generated in tradeable goods such as manufactured goods or software may impact domestic employment to different degrees than do trade deficits in raw materials. Economies which have savings surpluses, such as Japan and Germany run trade surpluses. China, a high-growth economy, has tended to run trade surpluses.
A higher savings rate corresponds to a trade surplus. Correspondingly, the U. S. with its lower savings rate has tended to run high trade deficits with Asian nations. Some have said. Russia pursues a policy based on protectionism, according to which international trade is not a "win-win" game but a zero-sum game: surplus countries get richer at the expense of deficit