The Fault for a Trade Deficit is by Definition the Value of the Currency

Eduardo Porter told readers in his Economic Scene column that because China's trade surplus overall has fallen, Treasury Secretary Timothy Geithner:

"will have a harder time making the case that America’s trade deficit is somehow China’s fault."

Actually, he will have no problem at all making the case that the U.S. trade deficit is the result of an over-valued dollar, which China helps to sustain by buying hundreds of billions of dollars of government bonds.

In a system of floating exchange r...