Argumentum ad Trade-Deficit

[DrKnow417]

Of course the trade deficit is non-existent. We give $1 billion to China, they give us $1 billion worth of goods. That's an even trade. There is no logical or practical reason to compare imports vs. exports. It's just an arbitrary statistic that has gotten a lot of peoples' panties in a bunch.

[xTAxGUNZ]

I would like to also add that the fall of the US dollar could have the effect of decreasing the trade deficit due to US goods being cheaper to the rest of the world. This would only work only if the recession that occurs is not completely devastating to our productive capacity.

[xTAxGUNZ]

I know this is a late response but I felt I had to respond. Your argument is both correct and false at the same time. Right no it may not be a big issue. There may come a time when foreigners will become less willing to hold dollar denominated assets. This will weaken the dollar more than it already is. The Fed will then raise interest rates to maintain foreign investment. This will cause a liquidity drain from our economy back into banks causing another recession.

[paleocrat]

Copy, paste, tweak, and read. I give you a B. Nah, B+ for effort.

Classical economists being called classical is hysterical. This mongrel horde came from the Enlightenment. Hardly classical.

Even Big Daddy Adam Smith valued protection of various sectors. His exceptions may be ignored by you guys, but they are there nevertheless.

So the more heavily you rely upon others for necessary goods and luxuries, the more free you are? Debtor nation status is a good thing! Welcome to Bizarro World.

[migkillertwo]

"copy, paste, tweak, and read"

I hope you're joking. If not then retract this slander or you'll be blocked.

"Classical economists being called classical is hysterical."

Yes, as if language has some sort of rigid set-in-stone meaning.

"So the more heavily you rely upon others for necessary goods and luxuries, the more free you are?"

in a way yes.

Paleocrat, are you a radical primitivist? Do you hold that everyone would be better off if everyone produced everything they consumed?

[paleocrat]

It would be libel, as it was written rather than spoken. Tough accusation. I am confident you do not know what constitutes libel in a legal sense.

They aren't classical in any sense of the word. They oppose virtually every traditional view of the political economy human history has to offer. Their notions are, by definition, novel.

In a way? Debt is deemed a form of slavery in Scripture. God talked of nations relying upon Israel, but considered the opposite to be indicative of lost sovereignty

[paleocrat]

In a way, yes? That would be like saying that submarines with fewer compartments whereby fires or water could be contained are safer than those with many compartments. These countries could change their tune, deciding they don't much care for the US. Or they could hit economic hard times. The more we find ourselves relying upon them, the more we rely upon their economic and diplomatic wellbeing.

Nothing like putting your eggs in one basket.

[paleocrat]

No. I have made this clear on more than one occasion. I do believe, though, that it would be in our economic interest to produce what we can produce for ourselves, as families, communities, and as a nation. Employment is maximized, ownership diversified, capital more equitably distributed, political power democratized, and notions such as community, commonwealth, neighborhoods, and national sovereignty strengthened. But this is a far cry from the agrarian ideal of Jefferson or economic isolation

[migkillertwo]

1: Let's try to avoid arguing over semantics

2: Debt isn't necessarily dependence upon someone else

3: Nations were just what everyone categorized themselves as. They're nothing more than fantasy structures that are manifestations of mass insanity

4: So you ARE a radical primitivist! Then I encourage you to either

A: Read any of the enlightenment economists (especially Bastiat), or

B: advocate that we remove ALL divisions of labor

[migkillertwo]

5: Why should we spread out political power? It would be better to just abolish the state so no one has political power

6: What is the benefit of equal, or roughly equal distribution of ownership and capital if everyone is more impoverished in the end? During the 80s collectivists in congress and parliament complained that ownership was being increasingly concentrated, but this is of no consequence. The rich were not becoming rich at the poor's expense because everyone was getting richer.

[migkillertwo]

7: Finally, why separate people into various collectives or nations? What more can this do than cause conflict? I say globalize.

[MrIdrovetheepb]

lol

[HonestDiscussioner]

But money can be reused over and over again. It's almost unconsumable. Cars, cigars, food, clothing, eventually wears down or are used and then they are gone.

So we give Japan 1 billion dollars and we get 30,000 cards. 30 years later they could still have the billion dollars in which they've bought lots of goods from themselves, and meanwhile the cars we bought are mostly gone.

The money may be worth less, but unlike the cars it won't be worthless.

We need to produce more.

[catholicwood]

Many export oriented countries, such as China keep billions of dollars as their reserves, this is what they get for their international trade surplus. But with inflation kept high, the actual value of their reserves will be diminished. Therefore, at the cost of high inflation, US might lower its real value of national debt, and hit the Chinese hard, as what they worked for will turn out to be worth not much more than the paper dollars are made of. Things were easier in times of gold standard.

[catholicwood]

Oh, sorry, I meant trillions of dollars. Sometimes I am forgetting that anglosaxon numerical system is a bit different.

[catholicwood]

Basic GDP value is calculated as follows: GDP=Y+I+G+NX. "Y" is a household disposable income, "I" private investments, "G" government spending, "NX" - net exports. That is correct, if your net exports is negative, your GDP will be lower. Taking into account a national perspective, it is better to export more goods, than to import them. If it is otherwise, we are eating up our savings. However, looking into a big picture, free trade is better for the economy of the entire world.

[catholicwood]

Pt. 2: Free trade allows the customers to purchase the products of the best quality and at the most competitive prices the world, not only their home country, has to offer. It does allow the poorly developed countries to eventually join the civilized world. It is not the monetary aid, but economic freedom that can make it possible. Protectionism is more sensible in some circumstances from a strategic point of view.

[catholicwood]

Pt. 3: Let us consider pre-WW1 United Kingdom, the greatest advocate of the free trade in the world at that time. Germany and the United States were much more protectionist leaning (while CSA was much more free trade leaning, that is why for the first years of civil war they were considered in Europe as the good guys, until Lincoln abolished slavery in the middle of the war). Great Britain did well with its free trade policy, but its farming industry was completely wiped off.

[catholicwood]

Pt. 4: Simply, the costs of producing food were much lower in other countries, such as Argentina for instance. New technology was developed to allow transport of meat on the ships while it was kept frozen so that it did not rot. But then, when the war began, German U-Boats appeared on the Atlantic ocean, making it difficult for the UK to import food. Rich Brits had experience something unthinkable - food shortages.

[catholicwood]

Pt. 5: For this reason, the British came to conclusion that for the strategic reasons, they need some farming, despite it is not economically justified. It could be done through subsidies, or tariffs. Currently, for similar reasons European Union spends a lot of money to subsidize its farming. Perhaps they have even gone too far, there's a lot protests in France and Germany to increase subsidies, the farmers start treat the subsidies as a easy way to make money without making much effort.

[FatGermanBastard]

Look migkiller. The thing is this: If money is just another good then that doesn't mean you can print as much of it as you like. The demand for it is limited. The problem about a trade deficit is that the amount of money outside the US is increased constantly and eventually it will reach the point where it exceeds the demand of that "good". It was the same if the US paid with chairs, for example. Eventually everybody outside the US would have 5 chairs and no need for them anymore.

[FatGermanBastard]

Part 2:

So all "trade deficit" means is that the amount of this good called money will eventually exceed the demand for it outside the USA.

I think it's rather obvious. The same applys to every good of course. If for example Microsoft exports more XBoxes than they can sell outside the US the XBoxes will lose value in the stores overseas. If you export too much of a good it will lose value. The US is exporting too much money and that's why it's losing it's value right now.

[FlowCell]

The Federal Reserve prints new money all the time. That's why we have inflation. If we were going to run out of money because of a trade deficit, then why does inflation happen to US currency?

In fact, I'm told that the Fed is currently monetizing our debts, which will inflate the currency significantly. If you trade in dollars, dump them.

[FatGermanBastard]

I'm not sure what you are trying to argue. The US is printing all that money because it exports this money and the amount of Dollars outside the US is getting to high as a result of this. This leads to inflation.

[TruthCeeker333]

I liked this video. I would agree. But the result with trading more money for manufactured goods is that we now are not manufacturing as much at home.

[trumasamune]

Yeah.....but you believe in Jesus!

Your argument is invalid.