Back in the Old Days, Rich Countries Were Supposed to Run Trade Surpluses

Paul Krugman outlines his story of secular stagnation in a blogpost this morning. The odd part of the story is that the trade deficit is nowhere in sight. The punchline is that a slower rate of labor force growth should lead to a reduction in demand. The simple arithmetic is that if the rate of labor force growth slows  by 1.0 percentage point, then this would be expected to reduce investment by 3.0 percentage points of GDP.

This is a story of a demand gap that could be hard to fill, but...