From Econtalk
(http://www.econtalk.org/archives/2010/11/don_boudreaux_o_4.html)
Important dichotomies to be precise about:
- Trade balance: Import vs. Export
- Having a trade deficit does NOT mean you are incurring debt.
- Financing: Equity vs. Debt
- Debt is NOT necessarily tied to consumption or investment, it is tied to leverage. Debt financing brings cash flow obligations capable of triggering defaults. With equity financing, there is no obligation, just an allocation of returns.
- Production: Consumption vs. Investment
- This is NOT pegged related to imports or exports, but rather to the decision to benefit now or benefit later. Investment is delayed consumption.