Today’s expert is Mark Perry, a professor at the University of Michigan-Flint, a visiting scholar at the American Enterprise Institute, and blogger at the website Carpe Diem. At Econ4U, we talk a lot about how you spend your money. But where is that money being sent? And is it a bad thing if we’re buying things made in other countries? We asked Perry for three things you should know about the “trade deficit.”

1.     Trade deficits are a positive consequence of cost-conscious American consumers and businesses shopping globally for the best value, quality, and price.

It’s frequently lamented that the United States has a trade deficit with China, Japan, and the rest of the world, meaning we buy more goods and merchandise from those countries than they buy from us. But it’s important to understand that it’s not countries that engage in international trade—it’s American businesses and consumers who actually do the buying and selling.  International trade reflects the voluntary behavior of millions of Americans who have collectively found great value by purchasing products—like iPods, trucks, computers, clothing, and so forth—produced overseas.

2.     The trade deficit as most people understand it doesn’t exist.

It was recently reported the U.S. had a $141 billion trade deficit with the rest of the world during the first quarter of this year (This means we imported $141 billion more in goods and services into the country than we sent abroad). But what doesn’t get reported is that the trade deficit was exactly offset by a $141 billion foreign investment surplus during the first quarter (This means that foreigners purchased more financial assets like U.S. stocks and bonds than Americans invested overseas).  The net result is that America’s total trade with the rest of the world was perfectly balanced in the first quarter of 2011, just like it is in every quarter and every year.

3.     Trade deficits are most often associated with periods of strong US economic growth—not decline.

Researchers at the Cato Institute found that, over the last thirty years, the U.S. economy grew at a healthy annual 3.6% pace in those periods when our trade deficit was growing larger—and an annual rate of only 1.0% when the trade deficit was shrinking. A recent example illustrates the relationship: even though it was reported that the trade deficit was “improving” (decreasing) in 2008 and 2009, America at that time was suffering from one of the worst economic downturns and financial crises since the Great Depression.

Today’s expert is Antony Davies, a professor at Duquesne University and a Mercatus-affiliated Senior Scholar at George Mason University. At Econ4U, we talk a lot about managing your own money—but what about the federal government’s money management skills? We asked Davies for three things you should know about the national debt.

1. The debt is yours. It is tempting to think of the government’s debt as the government’s problem. But remember that every dollar the government receives comes from taxpayers or is borrowed and must be paid back by taxpayers. That means that children today will be paying for today’s debt in the form of future higher tax rates. It’s the same as if your parents took out a credit card in your name and went on a spending spree. It doesn’t matter that your parents are doing the buying — you’re the one on the hook for the bill.

2. Don’t expect the rich to pay the debt. Even if the government taxed earnings over $250,000 at one-hundred percent, it wouldn’t raise enough money to fund its operations — let alone pay down the debt. The debt is so large that the only way to pay it down without cutting spending is to raise taxes at all income levels.

3. It isn’t going to get better. Even if the government pursued the politically unpopular course of raising taxes on the middle class, it wouldn’t raise enough money to pay down the debt and continue operating at its current level. If the government were a household earning $50,000 a year, it would be spending $85,000 a year and (so far) have racked up $320,000 on its credit card. The only way the government can hope to tackle its debt is to dramatically reduce spending –by dramatic, I mean cuts close to one-trillion dollars per year.

Note to Readers: Curious about just how big a trillion is? Click here to find out more.

Today’s expert is Mark C. Schug, a professor emeritus at the University of Wisconsin-Milwaukee and a national consultant on economic and financial education. The high price of a gas is a common complaint, but who’s responsible for those prices? And is that gas station boycott you heard about in a forwarded email really going to help matters?

1. Your local gas station isn’t responsible for rising gas prices. Most economists agree that gas prices are set by the laws of demand and supply.  Local gas stations are “price takers” and not ”price makers”—which means they’re paying the same high price you are. In fact, most retailers are only earning 1 to 3 cents in profit for each gallon sold.
2. High gas prices are painful for your wallet, but they do serve an important purpose. High gas prices are signals to oil producers that demand exceeds supply—which means they need to find more oil and come up new technologies.  Some oil companies are using new technologies in the old oil fields of the Texas Permian Basin; North Dakotans are aggressively developing oil deposits in the Bakken formation. Such new oil supplies may eventually bring oil prices back down.
3. Boycotting gas stations will not reduce the price of gas. Local gas stations are merely reflecting changes in the market—they have no more say over the price of gas that your local grocer or family doctor. What will reduce the price of gas is an increase in supply, which is why some elected representatives have discussed expanding supply by obtaining oil off the coast of Alaska, California, and Florida.

FunkyBear.com

In 2010, the average filer’s tax refund was a whopping $3,036, reflecting some new tax credits to stimulate the economy. A fat check like that gives the average family a whole lot of cash to spend as they see fit. Of course, the smartest ways to use it may not be the most fun but they will give you the biggest benefits in the long run. Read on for our tips to make the most of a hefty refund.

1. Put it in a Roth IRA. Since Roth IRA contributions cannot be deducted on your taxes, it can be a lot harder to come up with enough after-tax income to sock away $5,000 a year. But a fat tax refund can go a long way to ensuring your long-term financial welfare.
2. Make an extra loan payment. Take a look at the interest rates on your student loans, mortgage, car payment, or credit cards, and apply the money toward the one charging you the most on your balance. Bonus points if you can wipe out the debt entirely.
3. Start a rainy-day fund. An emergency fund is a safety net, a cushion, peace of mind — pick your metaphor — that provides you with accessible cash in the event of job loss, unexpected car repairs, big medical bills, and any other strokes of bad luck. If you don’t have one, consider yourself lucky that you haven’t needed one yet, and then take your government check and tuck it away into savings in case you ever do.
4. Put it toward tax-deductible purchases for 2011. Got a home office? Spend the money on new furniture or equipment and you can deduct the cost on next year’s taxes. Or make a nice donation to charity. There are lots of ways to spend money that will help your tax bill next year.
5. Bring home a bigger paycheck. If you’re getting a big percentage of your income back in a refund, you’re paying way too much in taxes every month. Rather than loaning that money to the government, talk to your company’s accounting department to increase your federal allowances on your W-4 form. Yes, it means your refund will be smaller next year, but you’ll bring home more bacon in every paycheck.

TeenageMoneyMultiplier.com

From Extreme Makeover: Home Edition to Bridalplasty, American culture has hit a saturation point in our fascination with the makeover. However, focusing some of that reinvention energy toward a more staid subject — retirement — will reap benefits that will last a lifetime. (Or at least, longer than Botox and a fresh coat of paint.)

Here are five fast fixes to rejuvenate your retirement plan.

1. Ensure your allocation is age appropriate. The rule of thumb is to subtract your age from 100 and put that percentage of your retirement money in stocks, which historically earn the biggest return on investment. So if you’re 25 years old, that would mean 75 percent of your investments should be in stocks or mutual funds and the remaining 30 percent in lower-risk investments like bonds, CDs, and cash.
2. Stash away your tax refund. You can do a preliminary work-up on eFile.com’s tax-refund estimator to see what kind of check you can expect to get from the government. But rather than dreaming of the vacation you will take or the TV you will buy, stick that money into a Roth IRA. It’s not like you were missing it all year anyway.
3. Rebalance your portfolio. If you’re properly diversified, every year that you’re invested means fluctuations in how each of your investments perform. So if your IRA is split down the middle into two mutual funds, one might do better than the other and it now accounts for 60 percent of your holdings, which alters your risk. Rebalancing will reset your allocations back to your original investment strategy so you don’t accidentally assume more risk than you intended. You can do this easily by contacting your retirement plan administrator.
4. Talk to your significant other about your goals. It’s not the most romantic of conversations, but knowing where your partner stands on retirement planning is crucial when talking about the future together. Find out now if your loved one is a grasshopper or an ant and whether your long-term financial strategies are as compatible as you are.
5. Fix it and forget it. If you’re thinking about taking a loan from your 401(k) to come up with a house down payment, think again. If you leave or lose your job, you will owe the balance of the loan in its entirety. That’s not something you want to worry about when facing job loss. Also, some 401(k) plans will not allow you to contribute to your account until you’ve repaid the loan. Consider how long it will take you to come up with the money, the employer match you’d give up, and the compound interest you’ll miss out on in the meantime — you’re better off just saving up for a down payment in a dedicated house fund.

But if you’re saddled with a huge car payment, struggling to pay your rent or mortgage, or throwing money away on high-interest debt, then those savings don’t seem to matter as much to your bottom line.

In other words, if you can’t make ends meet month after month, clipping coupons isn’t going to be enough to bridge that gap.

The solution? Find ways to slash your biggest expenses first — before cutting back on smaller budgetary line items. Here are a few tips to get you started:

• Maximize your tax deductions throughout the year to avoid scrambling to remember them all when it’s time to file your annual return. Keep files on all your charitable donations, deductible interest on student loans, medical care, and other qualifying expenses.
• Aim to spend no more than 30 percent of your income on housing, whether that’s rent or mortgage (and don’t forget to factor in property tax and insurance). If you can spend less on housing and still live in a safe area, do it.
• A rule of thumb: If you have to take out a car loan you can’t pay back in under three years, you can’t afford your ride.
• Most savings accounts right now are paying around 1 percent APR in interest. If you have credit card balances or student loans to pay off, you’re likely paying more than 1 percent on that debt, so your emergency fund is actually costing you money in the long run. Make a dent in it today.

Forget fine-tuning — overhaul your budget to see the biggest savings.

April is not just tax season, it’s also Financial Literacy Month. So now is the perfect time to test your money knowledge on one of our 10 quizzes.

Think you’re an expert on entrepreneurship? How savvy are you on saving? Can you cut it when it comes to credit cards?

Or if you’re really up to the task, take our 20-question quiz that covers a broad spectrum of money topics. You just might learn something new.

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CNNMoney.com interviewed Brad Olsen of GotADeal.com, who said that Target’s Black Friday markdowns, for example, will be “pretty aggressive” this year:

Olson said Target’s Black Friday “doorbuster” deals, or the extra juicy sales given for a limited time to early shoppers, look very attractive.

These include a Westinghouse 32-inch LCD HDTV for $246. “The $246 HDTV is the lowest price that we’ve ever seen for that model,” said Olsen.

Also in the ad: $3 Chefmate appliances such as toasters, coffeemakers and sandwich makers; a 40-inch Apex 1080p LCD HDTV for $449 with a $10 gift card; a TomTom GPS for $97; a Garmin GPS for $179; an RCA dual-screen portable DVD player for $88; a $39 Polaroid V 130 Camcorder; 50% off on select toys; and children’s clothing for between $5 to $7.

But before you get too excited about flat screens for under $250, it’s important to remember that retailers are using a psychological trick called “the scarcity principle” to entice you to spend.

Offering limited-time deals on a controlled supply of merchandise is a way that retailers make you think you will never get a discount as good as this one right here ever again. We give extra value to objects we perceive as rare, and there’s social cachet in being able to brag about what a great deal you got on that Blu-ray player.

But we have to burst Black Friday’s bubble: Consumers who get sucked into deals on stuff they don’t need are falling for the oldest marketing trick in the book. Not that saving money on items you were honestly planning to buy anyway is a bad thing — just make sure you really do need whatever it is that makes you get in line as soon as the turkey leftovers are in the fridge.

The clothing company H&M has made a name for itself providing high-fashion clothing at prices that most people can afford. (BTW – I am not paid by H&M; this is what my wife has told me.)

On occasion, H&M enlists the services of an otherwise exclusive designer, to produce a line specifically for the store. The latest such luminary is Jimmy Choo, the shoe & handbag designer of Sex-and-the-City notoriety. The line will be released in H&M stores in November.

The most basic black pump in Choo’s high-end line retails for around $500, with newer and flashier items fetching well over $1,000. At H&M, the entry-level price point will be $99, with the most expensive shoe topping out at $299. It’s not exactly Payless, but considering the demand for the designer, these are bargain prices.

Indeed, H&M is anticipating such high demand for this product that they’ve created a section on their website: “How to Shop.” The first 160 people in line at H&M stores will receive bracelets limiting their time to shop the Choo collection.

Furthermore, of the 150+ H&M locations in the US, only 10 will carry the line. Five of those are in New York City.

What gives? Why doesn’t H&M want everyone to experience the newly-affordable luxury that Jimmy Choo has created?

Not exactly. By limiting the supply and the amount that can be purchased, H&M is accomplishing two things: it’s ensuring that the price won’t fall, and it’s ensuring that Jimmy Choo maintains its mystique.

Consider this – what if every H&M store in the United States carried unlimited amounts of this line? Sure, they might be busy on the first day, but after a time the consumer demand would be satisfied. Inventories would build, and H&M would have to put the shoes on sale. So, not only would Jimmy Choo shoes be on the feet of every girl in the US, but they’d be selling at a discount price. The horror!

Instead of such a nightmare scenario, H&M and Jimmy Choo have played it smart. They’ve made a limited quantity, so the demand for these shoes will be far from satisfied, and there won’t be any pressure to discount the price. Additionally, since only a relatively lucky few will be able to purchase these shoes, Jimmy Choo can retain the exclusive aura that surrounds its name.

Now, while you’re standing in line on November the 14^th, you can explain to your fellow shoppers why the line has formed in the first place.

What’s your take on H&M & their supply of Choo’s shoes? Let’s hear about it in the comments!