In his March 2005 musings  on the reasons for a so-called global savings glut Ben Bernanke asserted that the US current account deficit was, by definition, “the excess of U.S. payments to foreigners over payments received in a given period.”
Thus the entire official meaning of ‘current account deficit’ hinges on the US Federal Reserve’s definition of what a ‘foreigner’ is. And what is a ‘foreigner’? Today most world ‘trade’ is dominated by giant transnational corporations (TNCs) who exchange goods, services and money within themselves and/or network with other TNCs.  The vast majority of these giant conglomerates are of US in origin. What that effectively means is that the US controls most global ‘trade’.
It is no coincidence that four out of five of these were from the US. 
“According to the Forbes Magazine’s ranking of 2007, the first five largest corporations of all times are not industrial but financial institutions.”
A single US corporation, Walmart is China's fifth-largest export market, ahead of Germany and Britain  and “Wal-Mart is responsible for approximately 10 percent of the United States' trade deficit with China.” , 
In fact, a new international system has emerged since the 2nd world war. It is unipolar and hierarchical. It is empire. "The United States has become the global 'world state' or 'world power' to which there is no challenger. There are now "extremely high levels of economic and financial integration" that "motivate cooperation especially in trade….[The US] "sets its own legal and moral standards admitting to no external sources of authority." , 
There is incontrovertible evidence that the US has come to its own unique definition of what is ‘foreign’ in its trading accounts with the rest of the world. As explained above, US companies dominate world commercial exchanges and transact with each other across national boundaries. Much of this trade is unrecorded in that the money transactions that do occur are often understated. The strong trend is for these large firms’ accounting statistics to be designed to actually ‘create’ losses in order to avoid taxation.
The establishment of a myriad of shell companies using offshore tax havens often makes it impossible to trace or measure the proceeds of international transactions. Further, up until early in 2008 the US Treasury’s definition of the words ‘foreign and ‘domestic’ was based on where the commercial entity was "created or organised". In May 2008 the definition of 'domestic' was changed. The purpose of this move was to exclude from 'domestic' those entities 'created or organised' outside of the US and who also had 'substantial foreign ownership'.  But the dubious definition of 'foreign' remained.
So where are we headed with this creeping loss of meaning. Despite a reigning US President now wearing Democrat robes ‘preferred nomenclature’ remains the order of the day. In Reagan’s time, just as it is at present, nations that are to be rolled back have governments that are called ‘terrorist’. Countries that are to be supported against unwanted insurgencies are still called ‘democratic’. But in things financial we now have a cleverer and more constant application of propaganda. We can see that money and goods that never change hands is now considered ‘trade’.
"Let us begin by committing ourselves to the truth, to see it like it is and to tell it like it is, to find the truth, to speak the truth and live with the truth."
Richard Nixon's nomination acceptance speech, Miami, August 8th 1968
 The Global Saving Glut and the U.S. Current Account Deficit
 It's NOT international trade. Don't be fooled.
Brenda Rosser. Thursday 24th July 2008
 The term ‘trade’ itself is open to question when a vast quantity of exchanges happen within the same global corporation or network of such companies.
 These corporations are: Citigroup, Bank of America, JP Morgan Chase, American International Group. HSBC Holdings is the other, a U.K. bank with approximate assets of $ 1.6 trillion.
From: ‘Finance-Military Complex’
 The Economic Crisis: A Wal-Mart Economy Dimension. Michael Perelman. Econospeak 18th October 2008
 Wal-Mart's 'China Price' By Joshua Holland, AlterNet. Posted November 7, 2005.
 A board member of the Reserve Bank of Australia - Roger Corbett - is a Member of the Board of Directors of Wal-Mart Stores, Inc as well as Fairfax Media Limited (one of Australia's oligopoly media empires). He is also Deputy Chairman, Non-Executive Director of PrimeAg, a corporation established in December 2007 and that has set its sights on a massive land and water grab in Australia using a lot of investor money from overseas.
 'Towards a Hierarchical International System? THIS Network.Department of Political Science and International Relations, University of Tampere, Finland. Working Papers 1/2005
 The trillion-dollar TARP bailout of large US financial corporations in 2008 displayed the readiness of America to abandon the austerity programs and principles it imposed on other countries (nations suffering from large current accounts, trading deficits and insolvent trading institutions just like America) when it suited.
 See the large number of online discussions relating to the practice of ‘transfer pricing’ in exchanges within and between TNCs.
 CFIUS Review of Foreign Investment: U.S. Treasury Department Proposes New Regulations to Govern National Security Review of Foreign Investment in the United States
Sullivan & Cromwell LLP - May 8, 2008
Just to re-enforce your point, pre-crisis the official measure of the net U.S. external debt, the NIIP, stood at $2.6 trillion, yet, if one adds up all the U.S. CA deficits since 1990, the figure is some $2.9 trillion higher, so the U.S. CA deficits have been turned into vapor-bucks, (i.e. the value of "U.S." claims on foreign equity holdings has increased much more than the value of foreign claims of "U.S." equity).
Thanks, John. Where did you get this info, btw?
In the news today:
Europe has become world's highest spender on outsourcing. US has fallen behind EU in 2009, says report
By Nick Heath, 21 December 2009 10:39
I assume this is the result of the higher value of the Euro. As companies there seek to remain competitive by lowering their costs in low-exchange-rate/cheap-labour/no-environ-regs-of-importance nations.
I first got wind of the facts cited in an article from the "Christian Science Monitor" several years ago. I tried several web searches to find more sources, using "U.S. external debt", "U.S. foreign debt", "U.S. Net International Investment Position"- the name of the official number according to the U.S. Treasury Dept.-, etc., and found next to nothing useful, -though that might be due to my deficient search skills. Still, one would think that such a strikingly prominent fact would be widely noted and discussed, eh? I did inquire with Brad Setser at his blog, and he did confirm the matter, referring me to a Belgian economist named Daniel Gross(?), who studied the matter and determined that $600 billion in bond debt was missing detectably from the NIIP, but the rest stood. And that the main reason for the discrepancy was differences between U.S. and foreign equity values. The last time I discussed it on Setser's blog, he did say that he thought the forthcoming NIIP would increase by $1 trillion or so, given the GFC, but that was fairly early in in the crisis, which has had huge volatility in both FX rates and equities, so who knows? Setser has since quit his blogging, since he signed up with the U.S. Treasury Debt.
Thanks for this, John. It is incredibly hard to obtain information that clarifies the US Current Account balance. It does appear to be a matter of actively and constantly searching. Revelations sometimes come through question marks over another nation's trade stats with the US.
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