“A monetary sovereign government can achieve and maintain full employment without seeking to run a trade surplus, and a trade surplus is never a valid policy objective for such a government: a monetary sovereign government cannot be frustrated in its pursuit of full employment by a trade deficit, and a trade deficit is never a constraint on the pursuit of equitable, sustainable full employment. This note explains that the current account balance of a country with a monetary sovereign government, like the fiscal balance of that government, is never an appropriate statistic to use as a policy target, and that the current account balance should be allowed to find its own level, depending on the behaviour of the foreign and domestic private sectors of the economy.”
