Empirical evidence points to a frequent coincidence between trade and budget deficits. This chapter examines the phenomenon from a national accounting perspective, encompassing the effects of changes in the savings rate and industrial investment. The deployment of credit is an overriding factor: credit expansion to finance production is not inflationary and promotes a balance of trade. Credit to finance non-productive consumption, which is associated with a low savings rate, together with budget deficits are both inflationary and lead to trade deficits. When the relationship between the trade deficit, the budget deficit, and the level of the savings rate are established, a wide range of trade balance outcomes is explained.