We're Chasing the Wrong Deficit

If you want to understand the root causes for the nation's (and the world's) economic distress, you can do no better than get hold of the 17 October 2011 issue of The Nation which features an in-depth article on John Maynard Keynes and his General Theory of Employment, Interest and Money.

Keynes believed that practical leaders would always see the supreme importance of keeping the country out of external debt—indeed, he seemed to see this as the first duty of the state. For Keynes, in his later years, it was the economic analogue to defending one’s country. Avoiding an external debt was an act of patriotism and national self-preservation in a sense that even reducing unemployment was not. ...Keynes would not believe how Obama, the Tea Party, the Democrats, the Republicans—our leaders—pay so little attention to our whopping trade deficit, as if it had nothing at all to do with our slump.

The right, the Tea Party, the Concord Coalition, Mr. Bowles and Mr. Simpson, Peter Peterson—they want to bring down the federal deficit. The left, our side, generally wants to go deeper into debt and get to full employment. Then we’ll bring down the federal deficit. Then we’ll have full employment and all will be well.

But until we bring down the trade deficit and fix our balance of payments, there is no way out of debt.

The bottom line: our corporate overseers have de-industrialized this nation to the point where even if Americans have money to spend, we will spending it on foreign made goods.

There's much more to the article. It's worth a second and even a third read.