Economic growth and trade deficits

 

  Economic growth is deeply related with the trade deficit. Economic growth helps increase the trade deficit while both 21st century financial collapses helped reduced it.

  Without trade deficits, economic growth could not occur. The Fed can not pump money into the economy unless inflation can be controlled. If inflation expands beyond an acceptable level, the Fed must increase interest rates and turn off the money supply. So long as inflation is controlled from cheap imports, the Fed can continue to increase liquidity.