Trade deficits don't matter. The wealth of a country is all it produces & keeps for itself, plus its imports/minus its exports. The exporting country gets nothing but a bank statement, the importing country gets the products. We get 2 billion cars from Japan, they get a bank statement at the fed. We're getting goods for nothing in return. If we had a fiscal policy that made sense, we'd have the spending power to buy both what other countries want to sell us and everything we want to produce.

That goes for Europe too.

The United States enjoyed a massive trade surplus from 1865 to 1965, and as an "exporting country got nothing but a bank statement?" What an irrational premise. The world was "getting goods for nothing in return." How could any thinking logically make such claims in light of historical fact?

What Japan got in return was a massive source of employment for its citizens and the most modern automobile manufacturing facilities on the face of the earth. So now millions of jobs and hundreds of billion in production facilities are "nothing."

What an utterly ignorant post by Putin.

In case nobody has noticed, Japan is recording record trade deficits right now, and its precisely at time when Japan's economy is coming out of the doldrums. Deficits are typically a sign of economic expansion and rising living standards. People have more money to buy things and they buy more imported goods. Look at US historical data. Deficits expanded greatly when the economy was growing - the mid-1980s, the late-1990s. In contrast, our deficit shrunk by half after the collapse of 2008.

In an era of fiat currency, yes all the exporters get is a bank statement that tells them where their dollars are. Exporters don't have a lot of options with which to use their dollar deposits. They mostly just sit there. What is China doing with its big dollar holdings? Precisely nothing. Meanwhile the US is getting more and more goods.

Another example - people think Germany is doing so much better than the rest of Europe because of its trade surplus & exports. But not really. Living standards are rising much slower compared to those 'irresponsible' Mediterranean countries. Germany sells fancy cars to other countries for the people in those countries to enjoy. Usually Germany even loans the money so the people can buy them, and don't have any chance of getting the money back. They're essentially giving the cars away. Meanwhile consumption in Germany is low.

I always wonder why someone would post phrases like "people think...blah blah blah." If the poster wasn't trying to bolster a weak argument with some fake authority to an ambiguous group of "people" why wouldn't they simply state who the "people" were by name or clearly identify them. Heck the "people" could be a couple of elementary school kids or they could be nuclear scientists. Who could tell from a label like "people." A typical tactic of a weak arguments appeal to fabricated authority.

Historically Japan enjoyed her greatest GDP growth during periods of trade surplus from the 1950 through the 1973. A period driven by a trade surplus driven by exports.
1950 | 160 966 | 9.10%
1951 | 181 025 | 12.46%
1952 | 202 005 | 11.58%
1953 | 216 889 | 7.36%
1954 | 229 151 | 5.65%
1955 | 248 855 | 8.59%
1956 | 267 567 | 7.51%
1957 | 287 130 | 7.31%
1958 | 303 857 | 5.82%
1959 | 331 570 | 9.12%
1960 | 375 090 | 13.12%
1961 | 420 246 | 12.03%
1962 | 457 742 | 8.92%
1963 | 496 514 | 8.47%
1964 | 554 449 | 11.66%
1965 | 586 744 | 5.82%
1966 | 649 189 | 10.64%
1967 | 721 132 | 11.08%
1968 | 813 984 | 12.87%
1969 | 915 556 | 12.47%
1970 | 1 013 602 | 10.70%
1971 | 1 061 230 | 4.69%
1972 | 1 150 516 | 8.41%
1973 | 1 242 932 | 8.03%
http://socialdemocracy21stcentury.blogspot.com/2013/01/japanese-real-gdp-growth-19252001.html

@Emac - you realize that % growth depends on the current size of tue economy, right?

If i start a new religion and then next year i get two people join, my yearly growth will be 200%, if Christianity achieved 200% growth that would come close to becoming the majority world religion.

So why are you comparing japanese percentage growth in the 50s when the economy was much smaller with the larger growth (but smaller percentsge growth) or the 90s - is that in any way a useful measure of trade and growth OR indeed something whichs ignores the rest of the historic context.

Neither flat dollar figures or percentages truly provide the picture. If you have 300 trillion dollars and make $500 or you have $100 and only make $50, the $100 to $150 is better growth than the $300,000,000,000,000 to $300,000,000,000,500. So both figures need to be looked at and analyzed with a discerning eye to decide who had what growth.

@orathaic - by 1970, Japan was the third largest economy in the world behind the US and USSR, and still experienced 8% growth. It passed the UK in GDP per capita in 1965. Given that, I would reconsider those objections.

Also, Japan is growing now because it is finally experiencing some inflation and devaluation of its currency, which boosts exports. That's what is lifting it out, not the extra spending (though that does not hurt). To those who think the current account doesn't matter, just take a look at Vietnam, Thailand, Russia, Argentina, Taiwan, etc etc. Most currency crises stems from problems with the current account and balance of payments.