International exchanges and free trade are in duress all over the world. China and the United States have been dangerously close to a trade war this spring and tensions will remain high in the future. Europe is waiting for the decision on steel and aluminium tariffs. Major free-trade agreements, (such as the NAFTA), are under threat of renegotiation, are blocked (the Transatlantic Free Trade Agreement or TAFTA) or abandoned by the US (the Transpacific Partnership or TPP). Never before has the risk of commercial confrontation been higher and more erratic that the one the world is witnessing today.

If currency manipulation isn’t the cause of the current trade deficit, what is? For the answer to this question, you need to understand that a country’s overall trade balance equals the difference between domestic saving and domestic investment.