Consequently, I have posted a quote from Econospeak which had little to do with the differences between Stiglitz, Minsky and Krugman. It focuses attention on the connection between trade deficits, budget deficits, and income inequality. This is a speech that no US president would dare to make.
If I were Obama’s speechwriter, I would say something like this: America’s economic pre-eminence and its key currency status has enabled it to become an unsustainable deficit country. This has fed the inequality that has made our society so much coarser and unjust. And this inequality, the ability of an economic elite to prosper while the rest of us languish, has undermined the political will to make the changes that need to be made if America is to prosper again.
And if I wrote that, I wouldn’t be Obama’s speechwriter much longer.
The US has been running trade deficits of around 5% of GDP for many years. Those trade deficits led to lost jobs and lower incomes for many Americans. Government borrowing and spending and consumer borrowing and spending has been necessary to compensate for large trade deficits.