The Power of Spin

Max Sawicki points out that the Prez's Council of Economic Advisors has decided to change the name of the trade deficit to the "capital account surplus." You've got to give them credit for creativity.

So says the new Economic Report of the President, signed by our new Federal Reserve Board Chairman Ben Bernanke, in a chapter entitled "The U.S. Capital Account Surplus." "Surplus" sounds much better, don't you think? We've got a surplus in the capital account. Capital is flowing in. It shows foreigners love us, they really love us. Not like those dreary deficits in the Federal budget.

Capital account surplus means foreigners are taking increasing ownership of U.S. dollar-denominated assets, since we buy more from them than we sell to them. It's like this: if you own your home free and clear and take out a mortgage to buy skittles and beer, you've got yourself a capital account surplus.