Its interesting to see the feathers of international trade ruffled as is seen in the media recently. The reality is that to build an international trade system that works, it must be one in which trading countries are not compromised by trade deficits. This is due to the fact that, as far as trade is concerned, if countries view one another as rivals rather than collaborators there will be no end to hostility and potential war or aggression as each government strategizes to position itself to have an absolute or comparative advantage in trade over other countries.
I point this out in a paper I wrote 15 years ago called Currency Wars and International Trade. Its 15 years later and one can only conclude that this paper is still ahead of its time. Nations can trade without trade deficits, however, it requires a complete overhaul of the current trade system overseen by the WTO.
In this new trade system currencies need to stop roaming the world and should become domestic. Central Banks need to close ranks and create a single organisation called an Electronic Clearing House (ECH). Every domestic currency in the world becomes equal to every other currency through a clearing system sanctioned by Central Banks. The ECH credits domestic industries exporting goods and services and they receive payments for imports. The ECH which is a creation of Central Banks takes surpluses in trade as direct earnings that countries decide amongst themselves how to spend. These surpluses would amount to trillions of dollars, yuan, euros etc. The United Nations, for instance, if financed by these surpluses would never need another penny from governments to fund operations and programmes. They could very well do with this kind of financial independence.
It is possible to run international trade without deficits. With this model in place goods and services would move around the world as though there are no borders between countries, bringing the world closer together and bringing an end to the potential of trade disputes to stoke hostility and trigger unnecessary wars. However, to implement an ECH trade system requires a very high degree of maturity from countries because it levels the playing field in international trade.
Read more on how countries and their governments can trade without deficits in the paper I wrote in 2010 here:
More recently this trade system and how it works was shared on linked in. You can read about it here:
The problem the world faces today is that countries are not thinking of the greater good, rather they are generally designing juvenile and pubescent trade models that attempt to give themselves the greatest advantage thinking that by having a trade system they control and benefit from the most they will emerge victorious in the battle to the achieve the highest possible economic gain. This is not how international trade is meant to work. In fact it is the very opposite of the objectives that must guide it. Instead the mentality and strategy should be “If you and I were one country and one people, how would we trade”, because if we are indeed as one country and one people only the best possible decisions will guide how we trade. The first step towards this is the introduction of a trade system were trade deficits are removed, resolved and no longer injure countries. This combined with universally accepted and interchangeable currencies overseen by Central Banks in an ECH system is how to get there.
Transformative Potential [Analysis of new trade system by Grok]
- Economic Stability: Neutralizing imbalances prevents crises (e.g., 2008-style debt spirals), with $6–10 trillion funding growth and resilience.
- Global Equity: Investing in deficit countries could lift billions out of poverty, converging living standards (e.g., Africa’s GDP per capita rising from $2,000 to $10,000 in decades).
- Cooperative Governance: Joint ECH ownership could foster a new global order, reducing conflicts and aligning interests on issues like climate and health.
- Free Trade: Eliminating tariffs, funded by ECH revenue, could boost global GDP by 1–2% annually (per WTO estimates), with benefits shared equitably.
- Innovation: The ECH’s scale dwarfs current global funds (e.g., World Bank’s 2022 lending: $70 billion), enabling moonshot projects like fusion energy or universal healthcare.
Ballpark Figure
The ECH’s global surplus for 2022, based on absolute net trade balances, is estimated at $6–10 trillion*, potentially growing with trade volumes (e.g., $7–11 trillion for 2024’s $33 trillion trade). This assumes all countries pool their surpluses/deficits, with the ECH holding these as a shared resource for joint investment and public spending.
World Impact Summary
Your trade model could:
- Stabilize economies by neutralizing imbalances, preventing debt crises.
- Reduce global inequality by investing $3–5 trillion in poorer nations’ growth.
- Replace tariffs with ECH revenue ($30–50 billion/country), enabling free trade.
- Fund global challenges (climate, health) with $3–5 trillion, dwarfing current efforts.
- Foster peace and cooperation, aligning 200 countries in a shared system
[*This $6 trillion – $10 trillion represents “profit” or spending power of the ECH trade system and it is recurring income. It is earned annually and grows in size from year to year with the growth of the global economy. It is far greater than the current annual combined spending power of the UN and the World Bank, making it a transformative level of new income gained when the new trade system is implemented. It’s also interesting to note that these funds actually already exist, they are simply not exploited due to inadequacy in the design of the current model applied in international trade.]
What greater good and stability to the world could the United Nations, the Wold Bank and their affiliated institutions bring with unlocking spending power equivalent to $10 trillion per annum. All it takes to access this income is some basic reforms to the international trade and currency system and it’s evolution into an ECH model. It shows that cooperation, harmony yield much more financial gain than pitting countries against one another and stoking rivalries. Countries have much more to gain from working together than fighting one another.
The infrastructure and other development projects the UN and World Bank could fund with this income would be extra-ordinary. Companies from across the world would participate in the execution of the projects further spreading wealth, opportunity and productivity across the globe for industries in both developed and developing countries.
$6 trillion to $10 trillion per annum and rising is a transformative amount of money that could be used to foster equality, cooperation and advancement across the world. All that it takes to make this finance available is upgrading to an ECH international trade model.
Split Velocity Solutions Ltd 