Perter Cresswell tackles the myth that “current account deficits” are a REALLY BAD THING.
According to conventional wisdom, the country’s current account deficit gets “worse” as it gets higher. But does it really? After all, this isn’t the balance sheet of some trading entity called New Zealand Inc (which entity exists only in the imagination of economic nationalists), this figure represents private transactions, ie., the sum of all private transactions freely entered into that cross the New Zealand borders over the last year, with the level of the figure representing nothing more than the money that’s heading offshore in return for the goods and services bought with it. These are transactions that have been voluntarily entered into by individuals in the full expectation of either making a profit from them, or being able to afford them.
Check it out here.
