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President Obama says the trade deficit is shrinking. According to the Department of Commerce, the deficit did shrink for 2012 but expanded again slightly this year.

Nevertheless, the overall improvement in the past two years does point to a potential major change in America's trade balance. Major change in the prospects of an economy of America's relative size could have a profound effect on the world and the relative strength of the dollar.

The Treasury's expenditures of more than $1 trillion a year to buy bonds has effectively boosted the prices of assets like stock, bonds and real estate. Americans are now richer in aggregate than ever. According to the Federal Reserve, the aggregate wealth of households and nonprofit organizations rose to $74.821 trillion on June 30. That is almost 50 percent larger than the world's total annual production.

However, this vast wealth has been accumulated largely by the relatively rich 1 percent who can afford to buy assets. Wages have stagnated, creating a widening and politically dangerous wealth gap. One side effect of this continued flat income of ordinary Americans is that it keeps inflation muted.

Other nations eye America's giant consumer market with envy. They fight hard, even devaluing their currencies, to compete for lucrative U.S. sales.

Two macro trends are working to reverse the trade deficit substantially and, in aggregate, make Americans even richer.

The first trend is increasing energy self-sufficiency and rising energy export earnings.

America possesses vast natural resources. Energy exploration technologies such as fracking and horizontal drilling have unearthed viable sources of domestic oil and natural gas. The latter can be liquefied and transported overseas where it sells for four times more than here, even after costs.

A handful of American LNG export terminals have been approved by the Department of Energy, and more than 25 terminals await planning permission, according to the latest federal information. Given the U.S. spot price for LNG, the export earnings potential becomes clear.

In addition, American oil companies are moving to export higher value-added specialty fossil fuel byproducts. This will boost energy export earnings further.

The second macro factor boosting potential export earnings is the fact that manufacturing is being “reshored” to America.

Labor costs are rising in Far Eastern nations, even in China. In America, high labor costs have driven manufacturers toward embracing revolutionary technologies including robotics, 3-D printing and more advanced IT planning and control systems.

Because energy prices are a key element of production costs, falling prices for LNG are encouraging U.S. and foreign manufacturers to establish production facilities here.

If U.S. politicians continue to allow domestic business leaders to reduce energy costs and finished goods imports while boosting exports, America's trade deficit could turn into a massive surplus. Over time, this will further strengthen the value of the dollar and the living standards of Americans.

John Browne, a former member of Britain's Parliament, is a financial and economics columnist for Trib Total Media. Contact him at johnbrowne70@yahoo.com.

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