The disturbances in the global economy induced by the US trade and budget deficits are widely recognised by economists, even if the precise causes and effects of these deficits remain a topic of debate, What is less widely understood is that the deficits are pregnant with geographical implications for the world economy and that the production of the deficits can be explained in part by the changing and asymmetrical location of the USA in international economic and geopolitical relations. In this paper, both of these points are expanded. In section 2, competing accounts of the production of the US trade and budget deficits are considered. Particular attention is paid to ‘Reaganomics’ as an economic and geopolitical discourse. In section 3, the implications of the twin deficits for the US space-economy are considered. The regional impacts of increased military (and other) spending under Reagan are noted, as are the likely effects of the alienation of US real assets and of the buildup of debt-servicing obligations for future generations. In section 4, the implications of the US deficits for the rest of the world, and for the less developed countries in particular, are examined. Attention is drawn to the emerging links between the geography of international trade and the geography of international debt. The regional implications of a debtors' surplus are discussed in section 5, which serves also as a conclusion.
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