What sickness do the economies of the United States, the United Kingdom and the larger Commonwealth nations have in common? A massive trade deficit. Consider farmer Sam.

For many years, Sam was prosperous. He raised an abundance of food, which he was able to sell. With the money he received, he purchased what he needed and saved the rest. When he began to want things he did not really need, Sam dipped into his savings. For many years, Sam was able to buy (import) more things than the sale of his farming exports would normally pay for by depleting his savings. Unfortunately, Sam’s savings have almost run dry. To make matters worse, all the other (foreign) farmers are now starting to use improved fertilizers and machinery; because Sam has no savings, he cannot afford to upgrade along with them. Sam is facing a bleak future of increasing debt and stagnant farm exports.

Like farmer Sam, the U.S. and Britain, as well as many Commonwealth nations, are spending more money than they are earning. Consequently, their trade deficits (i.e. excess of imports above exports) are mushrooming.

Of these, the U.S. trade deficit is the worst. With just 5 percent of the world’s population, the U.S. consumes about 20 percent of the world’s imports (Grandfather Economic Report, April 12).

In 1971, the U.S. annual trade deficit was $1 billion. By 1980, it had grown to $19 billion. By 1989, it had mushroomed to $93 billion. Between 1996 and 2001 the trade deficit rose a whopping 250 percent. In 2004, the trade deficit was a staggering $668.1 billion.

Economists know that the trade deficit is not going to get significantly better any time soon. This past October, the U.S. monthly trade deficit came in at a new eye-popping record of $68.9 billion. This new record was a 4.4 percent increase over September, which in turn was a huge 11.9 percent rise over August. Disturbingly, the current trade deficit continued to deteriorate despite the recent pullback in oil prices.

One of America’s largest trade deficits is with China. In October, the U.S. imported a record $24.4 billion worth of goods from China, while selling only $3.9 billion back. Further frustrating U.S. policy-makers is the fact that this deficit has continued to surge even after Washington and Beijing reached a deal to curb China’s clothing and textile exports to the U.S. by 10 percent.

Even though many analysts are quick to blame China for America’s trade imbalance, the U.S. has trade deficits with other countries as well. In fact, government statistics show that in October, the U.S. also had record monthly trade deficits with the European Union, Mexico, opec and Canada.

Many of the nations comprising the British Commonwealth are in the same predicament.

During the third quarter this year, the United Kingdom had the highest quarterly current account deficit (₤10.2 billion) (trade deficit including investment income and transfers) since its records began in 1955. The UK has now had a current account deficit for every quarter since the third quarter of 1998.

Australia too has been showing record negative trade imbalances. According to the Australian Associated Press (August 2), Australia has just recorded its worst ever annual trade deficit, which is projected to be au$25.5 billion (us$18.56 billion). Forty-four months in a row, Australia has imported more than it has exported. Most recently, the increasing trade deficit was credited to imports from China, which overtook the U.S. as Australia’s largest supplier.

Like Australia and the UK, New Zealand and South Africa have also been importing much more than exporting. As of fiscal year ending September 30, New Zealand’s account deficit widened to a record nz$12.9 billion (us$8.8 billion), while South Africa posted trade deficits nine times out of the last 12 months (Africa News, December 1).

Lately, many Canadian economists have been applauding the strength of their economy and trade surplus. However, if not for the increase in oil prices over the last two years, Canada’s trade surplus would be practically non-existent too. With the rise in oil and natural gas prices, energy is now Canada’s largest export sector. During October, Canadian exports rose to a record ca$40.2 billion, while imports rose to ca$33 billion, for a trade surplus of ca$7.2 billion. However, Canada’s surplus on energy goods was ca$6.3 billion of the total (Canadian Press, December 22). Excluding energy, Canada only recorded a ca$0.9 billion (us$0.76 billion) yearly surplus—not exactly a diversely booming export sector as some would have you believe. According to the Canadian Press, outside of the trade surplus with the U.S. (mainly energy), the trade deficit with other countries actually deepened to a new record (ibid.).

While the U.S. and British Commonwealth are experiencing record trade deficits, some notable competitors are reaping surpluses.

Germany, for example, during the first six months of this year, had a €84.8 billion (us$100.5 billion) trade surplus that reached an all-time high for a half-year period. In 2004, Germany netted a surplus of €156.1 billion (us$185 billion). The U.S. bought 8.86 percent of all German exports in 2004, while the UK purchased 8.35 percent (Xinhua General News Service, September 13). Germany’s trade surplus has been powering Europe’s export surplus as well.

During the first half of 2004, the EU recorded a net trade surplus of €41.1 billion (us$48.7 billion). This year, due to rising energy imports, the EU first-half trade surplus fell to €17.3 billion (us$20.5 billion), but was still positive (Irish Times, August 20).

Both China and Japan are selling more than they are importing. Although China has trade deficits with some nations, according to China’s vice minister of Commerce, overall China will realize a trade surplus of more than us$100 billion this year. Individually, China is expected to have a us$63 billion surplus with the EU, and more than us$200 billion with the U.S. This past November, Japan recorded a us$5 billion surplus, and according to Bloomberg, one of the contributing factors has been very strong sales by Toyota and Honda—which expect to increase sales in the U.S. by 10 and 4 percent, respectively.

In the long run, it is important for nations to have a positive balance of trade because it is a major means by which money is imported. For more than 30 years, the U.S. has been running trade deficits. As billionaire investor Warren Buffett has said, the country’s net worth “is now being transferred abroad at an alarming rate” and that “a perpetuation of this transfer will lead to major trouble” (Associated Press Financial Wire, December 6).

At this point, countries like China and Germany seem to want a strong U.S. dollar so that Americans can buy more of their goods. Consequently, foreigners are purchasing U.S. Treasuries to help keep their currencies relatively weak and the greenback strong. At some point, however, this will change. Domestic demand within China and much of Asia is rocketing. Once Asia develops the domestic demand for its own industrial production, Asian nations will not rely so heavily on American consumption. Then Asia will become a larger market for European exports as well—further reducing the importance of American consumption.

When this happens, the need of foreign nations to support the U.S. dollar will drop. Foreigners will cut back purchases of U.S. Treasuries, causing the dollar to slide and inflation to skyrocket. The same holds true for the UK and British Commonwealth.

Why are these nations in such dire straits? Their identity is unbreakably linked within the pages of biblical prophecy. Not only is that identity revealed in our book The United States and Britain in Prophecy, so too is the core reason for their economic woes. All of the economic explanations are rooted in a spiritual cause. If you have never studied this book, we strongly urge you to do so today.