David Rosenberg: The United States is blaming others for the financial mess it created

financialpost.com:

United States President Donald Trump thinks the rest of the world is ripping off the U.S., when the reason for its trade deficits reflects the fact that Americans are spending more of their after-tax incomes than virtually every other country on the planet.

The personal savings rate scale is at the very low end of the global range. You cannot, at the same time, have a society where economic success depends on mass consumerism that will ever not coexist with a trade deficit. What part of this do Trump and his team not comprehend?

As part of this consumerism, the U.S. is the only major country with neither a national sales tax nor a value-added tax. It is, therefore, completely natural for a country that pursues consumer-oriented spending to be the one with trade deficits.

The balance of payments must always balance, so if Trump crushes the current account deficit, he ipso facto crushes the capital account surplus. That, in turn, means financial conditions will have to tighten.

Every action has an equal and opposite reaction. The Trump administration could well force a voluntary debt restructuring, but that doesn’t address the underlying issue, which is that even excluding interest costs, the deficit would top US$1 trillion.

And the deficit isn’t because the U.S. is too generous to the rest of the world. That is small potatoes, but it plays well in Peoria. The ticking time bomb is aging demographics and the implications on entitlement spending, which Trump on the campaign trail said he would never touch. Everything else on the budget file is tied for a distant second.

There is growing talk that the administration is going to revalue gold reserves to help pay off some of the debt along with a plan to encourage non-residents