Dennis Gartman says the only way we’re going to fix the U.S. trade deficit and trade imbalance is through a full-fledged depression, featuring a 100% income tax:
Gartman: Turning to the economic data of the day, on Friday the Commerce Department reported that the US imbalance of Trade rose to -$36.5 billion and that was far higher than had been expected and much is being made of the fact that this was the largest single monthly percentage increase in “more than a decade.” We simply want everyone to take a very deep breath and relax, noting “So what?””
As we have argued, a fully fledged Depression would cure the imbalance of trade
and likely give rise to an imbalance of trade surplus as demand for foreign goods would disappear while the demand from abroad of US goods would fall, but not as swiftly.
As we have often said, we could “cure” both the US trade and budget deficits… at least for a short while… by raising taxes on income to 100%. For a month or two, before adjustments could be made, tax receipts would rise sky-high and demand for foreign goods would plunge. The budget deficit, for a month or two, would be in eliminated and the trade deficit would become a trade surplus… at the expense of a Depression that would last a decade. Ah, but if surpluses are what is wanted, this will create them! All in favour?