What is a US balance of payments? What are its features? We will answer these and other questions in the article. The balance of payments of America refers to the ratio between the amount of payments received from abroad and the amount of payments going abroad.
If the funds received in the state exceed payments to other countries and international organizations, the commercial balance is active (positive balance), but on the contrary, then passive (negative balance).
Deficit
Consider the balance of payments of the USA as detailed as possible. The deficit in the balance of payments from the perspective of macroeconomics is a macroeconomic value reflecting the situation in which net total revenues to the state are negative. The same deficit from the standpoint of microeconomics is an indicator that recreates the predominance of the totality of payments to foreign entities of control over the amount of finance received from foreign business executives.
A bit of history
It is known that the structure of the balance of payments of the United States evolved under the influence of the development of US imperialism and is a reproduction of its role as an international exploiter. As early as the 19th century, the balance of payments of America bore the imprint of the tricks used by US capitalism to increase its wealth. It consisted of income from colonial oppression of more vulnerable countries and peoples and the receipt of loans and borrowings from England and other countries.
By the nature of its economic external relations, America for most of the 19th century remained a West European debtor. After the US civil war ended, the evolution of capitalism in this country (both in agriculture and industry) accelerated, which caused a sharp increase in exports. According to historical data, the balance of payments of the United States became active in 1873. Its dynamic balance until the First World War served mainly as a means of paying profit and interest on foreign investment in the United States.
So, for the years 1874-1895, the US balance of payments surplus totaled $ 2.5 billion, transportation net expenses - $ 560 million, interest and dividend payments - $ 1.9 billion.
In the years 1896-1914, out of the active difference in foreign sales of $ 9.2 billion, three billion went to pay interest and dividends, and 640 billion went to transport costs. During the First World War and after its completion, the active difference in the balance of payments of the United States increased, the balance of the current items of this balance became active, which made it possible not only to buy back foreign capital investments in the United States and pay all previous debts on external loans and borrowings, but also become the main the creditor of the world of magnates who are widely exporting wealth.
It follows that the functions and significance of the active US trade balance have changed dramatically. If earlier he expressed the financial dependence of the United States on other states, then after the First World War he began to show the imperialist expansion of the United States, striving to capture a significant part of the areas of capital export and global sales markets.
Gold reserve growth
What was the state of the balance of payments of the USA at the beginning of the 20th century? Until the collapse of 1929-1933, due to the significant export of short-term and long-term capital of America, this balance did not show a large surplus, and often (in 1925, 1927, 1928, 1919, 1920) it was even passive.
The inert balance of payments of the United States was offset by the export of gold from this country.When the global economic crisis ended, under the influence of the deep contradictions of America’s imperialism, aggravated by the subsequent complication of the general depression of the imperialist world system, the US commercial balance acquired new features. After 1933 and until the beginning of 1942, it became constantly active, which caused a huge import of yellow metal to America. For the years 1934-1941, the import of gold into this country amounted to 15.7 billion dollars. During the same time, America’s gold reserves rose from $ 7 to $ 22.75 billion, more than tripled. It was a process of gold "obesity" of the USA
The commercial balance of America during this period was active due to the following reasons:
- a sharp increase, starting in 1930, of state overprotection, which reduced the access of foreign products to the US market and the import of goods into this country;
- a decrease in the export of capital from the United States under the influence of the collapse of 1929-1933 and the coming narrowing of the zone of application of exported wealth;
- the tide of short-term Western European capital in the United States under the influence of the threat of World War II.
Feature
Many experts analyze the balance of payments of the United States. It is known that the disorganizing role of imperialism in America was affected by it with unusual strength after the Second World War, when its dynamic balance not only did not decrease, but increased even more. Export prevailed over import more than twice in some post-war years. Today, the active difference in America's commercial balance is about $ 5 billion annually (against a couple of hundred million dollars before the war).
This is a specific quality of US imperialism, stemming from the entire system of dominance of the state monopolies in the economic life of this country, consists in replacing the multifaceted economic communications between countries with their one-sided ties with the USA. It is this nuance that leads to the disorganization of the trade balances of other capitalist states.
Foreign investment
A large item of income in the US balance of payments is made up of foreign investment profits. Net income for this item is $ 1.5-2 billion. This means that approximately 10-15% of US imports today go towards paying tribute by other countries to America’s monopolies. This article reimbursed only 8-10% of deliveries before World War II. This expresses the strengthening of the exploitative, imperialist character of America's commercial balance.
Maritime shipping
The United States has strengthened its position in the maritime zone. Before World War II, this article was usually reduced in the US trade balance with an inert balance. The United States after the war every year on this article receive a net profit in a very substantial amount.
Active balance
Despite the increase in other foreign spending, in view of the above changes, confirming the growing role of the United States as an interethnic oppressor, the dynamic balance of these articles of the American trade balance has increased sharply. At present, it amounts to 4.5-5 billion dollars annually, while before the Second World War it occasionally blocked, and even then in insignificant amounts, 1 billion dollars.
Post-war period
Unlike the pre-war phase, after the Second World War, the United States made a significant export of both loan and functioning savings. The general contraction of the zones for exporting values did not allow us to cover the dynamic balance of these items of the US commercial balance, as happened after the First World War. The outflow of capital abroad each year amounted to less than $ 1 billion.
As a result, America's renewed pumping of gold from other countries was resumed. It did not take on a larger scale only because of the bankruptcy of other capitalist states, where regular inertia of commercial balances led to a decrease in gold reserves.
In this environment, “irrevocable subsidies” for the US “support” became a way to operate the US active trade balance. These “subsidies” covered up to 75% of America’s dynamic trade balance. It is significant that the US monopolies combined their “subsidies” to other countries with the most zealous pumping of gold from other states.
Negative consequences
The chronic activity of the commercial balance of the United States has such an unfavorable outcome for the international economic relations of the capital countries:
- pumping gold from other states deprives their currency of any stable solid base;
- the dynamic balance of the US commercial balance and the decrease in the gold accumulations of a number of states impede the balance of trade balances of most capstran countries using yellow metal;
- “Irrevocable subsidies,” which are a method of applying the dynamic balance of America's commercial balance, reinforce the one-way nature of communications between the United States and other countries;
- the continued activity of America's trade balance weakens the position of the States themselves as an exporter of products, because other states are not able to pay for purchased goods in the United States by reciprocal deliveries of their own products.
It follows that the American balance of payments is a specific mirror, which reflects the disruptive role of America's monopoly capital in the economic relations of the world, its tendency to the one-sided course of foreign economic communications of the capital countries, as well as the growth of contradictions and unevenness in the system of imperialism.
Data
According to the Bureau of Economic Analysis at the Department of Commerce of America, the US balance of payments deficit in the second quarter of 2016 decreased by 9% compared to the previous quarter - to $ 119.9 billion. It follows that the current account deficit of America’s trade balance has decreased to 2.6% of GDP compared with the 2.9% that were previously. And in 2017, in the second quarter, the deficit of this balance amounted to 123.3 billion dollars against the expected 125 billion.