EC6012 students should take a look at this article on debt and trade deficits, on how the US, with a very low savings rate, and already up to its eyeballs in debt, can experience an improvement in its trade deficit over 2009, mainly by printing money. Put these two charts from Mike's post side by side, and you'll see why. The US is printing M1-money, which is going into Treasuries, and storing up debt, which may lead to a US-specific meltdown in currency terms in the next 3 or 4 years. This is a worry for everyone, because the old phrase about the US sneezing and everyone else getting a cold is true, especially for Ireland. We'll most likely get Man-Flu though. Unless, of course, deficits don't matter for the US.
What article?
Hi Tim, the report is here: http://www.boeckhinvestmentletter.com/newsletters/Volume%202.1%20Global%20Disequilibria%20Feb%203%202010.pdf