Some countries like Portugal have had a trade deficit for the last 60 years. That predates EZone and EU membership.

First there was the Bretton Woods gold standard, then there was the European Monetary System, then there was the Exchange Rate Mechanisms ERM I and ERM II. Throughout, Portugal ended up devaluing its currency. If there hadn't been a decades-long policy of fixed exchange rates, maybe Portugal might have had a gradual devaluing of the currency (not a periodic crisis) and a much smaller trade deficit (still a deficit, but within statistical error of zero).

Trying to keep your currency overvalued will produce the trade deficit, and then the devaluation crisis. An overvalued currency, however, is great for the local elite to take their rentier income out of the country.


I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS