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Why does the U.S. always run a trade deficit?

libertystreeteconomics.newyorkfed.org

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Re: Why does the U.S. always run a trade deficit?

#231

Post by hypeatei »

bumby wrote: post #200
chris_va wrote: post #191

The author seems to gloss over the economy not being a zero sum game. As an example, since this is HN: the US creates a ton of startups. Any country that creates new businesses is going to see foreign investment, which on paper leads to a trade deficit. Essentially, the US exports businesses to the rest of the world, but that is not tallied in a 19th century model for the trade balance of goods. However, it's arguabl…

> However, it's arguably a better export that commoditized goods, from a margin standpoint. Importantly, this is the same dynamic that causes economies to move away from manufacturing towards service-oriented economies. Capitalism is going to chase higher margins, but there should be guardrails that mitigate the negative externalities of such behavior. Else we are left with an eroded middle class, lack of supply chai…

> weakened national security manufacturing capacity,

What products specifically would be a national security concern? The CHIPS act was passed to revitalize semiconductor manufacturing because we rely heavily on Taiwan. From my understanding, we already have a lot of domestic manufacturers for various parts, who are too expensive for the average American but are the main suppliers to the DoD.

Re: Why does the U.S. always run a trade deficit?

#232

Post by ty6853 »

triceratops wrote: post #230
mitthrowaway2 wrote: post #201

Earlier quoted context omitted.

How do you ship fixed infrastructure to another country when they want to redeem their USD?

You don't. You give them a title to the infrastructure. Exchange paper for paper. Pretty neat right?

Developed real estate titles are notoriously one of the least fungible assets in existence.

Relatively uniform rural undeveloped farmland titles might work but I doubt it would get the same historical inertia since gold outlasts governments more reliably than land titles.

Re: Why does the U.S. always run a trade deficit?

#233

Post by triceratops »

ty6853 wrote: post #232
triceratops wrote: post #230

Earlier quoted context omitted.

You don't. You give them a title to the infrastructure. Exchange paper for paper. Pretty neat right?

Developed real estate titles are notoriously one of the least fungible assets in existence. Relatively uniform rural undeveloped farmland titles might work but I doubt it would get the same historical inertia since gold outlasts governments more reliably than land titles.

That's a problem for any foreign holder of USD who wants to redeem it. So far they've been ok with it.

(I didn't mean the government hands out land titles. The holder of USD uses it to buy assets in the country)

Re: Why does the U.S. always run a trade deficit?

#234

Post by losvedir »

elzbardico wrote: post #129

Why would you not if you don't incur in external debt doing so? The real wealth is not dollars or pounds or whatever, the real wealth is goods and services. Having access to goods and service is what gives you a better living standard, the money is just a way to exchange them and to store value. The US has the privilege of having high international demand for its currency, as it is the default global reserve currency…

> Why would you not if you don't incur in external debt doing so?

Don't you, though? If you're in a trade deficit with another country that means they end up holding a bunch of your currency. That's basically a debt, right? They have the ability to get goods from you whenever they want, without having to give you any in return (just giving the currency back).

Re: Why does the U.S. always run a trade deficit?

#235

Post by AtlasBarfed »

neilwilson wrote: post #152

It’s amazing how everybody misses the wood for the trees. Where else is China et al going to sell all the stuff they can produce via their physical overinvestment that was driven by the “export led growth” mantra? There is no untapped source of demand anywhere in the world. There isn’t the income. All they could do is produce less and cause their economies of scale to go into reverse. So instead they sell stuff for a…

"There is no untapped source of demand anywhere in the world."

I understand what you mean, as in the current structure of governments/economies, there isn't a magic wellspring of demand.

Centralization of wealth starves demand, whether it is in authoritarian governments or an oligarchy/kleptocracy. The US certainly has been doing that for the last 50 years. I think there is a lot of demand and growth that is suppressed by the, uh, overindulgence of the "elite".

The elite care about the gap between them and the plebs. The rich love slaves, and that is their ultimate goal.

Re: Why does the U.S. always run a trade deficit?

#236

Post by [deleted] »

triceratops wrote: post #233
ty6853 wrote: post #232

Earlier quoted context omitted.

Developed real estate titles are notoriously one of the least fungible assets in existence. Relatively uniform rural undeveloped farmland titles might work but I doubt it would get the same historical inertia since gold outlasts governments more reliably than land titles.

That's a problem for any foreign holder of USD who wants to redeem it. So far they've been ok with it. (I didn't mean the government hands out land titles. The holder of USD uses it to buy assets in the country)

[deleted]

Re: Why does the U.S. always run a trade deficit?

#237

Post by sorcerer-mar »

20after4 wrote: post #198
sorcerer-mar wrote: post #113

Earlier quoted context omitted.

Seems at least equally probable (IMO far more) that was due to the whole invading Kuwait thing. Carter ten years prior: "Let our position be absolutely clear: An attempt by any outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the United States of America, and such an assault will be repelled by any means necessary, including military force"

It appears that the US mislead¹ Saddam Husein into believing that the we would not intervene in the border dispute with Kuwait. This was enough assurance for him to go ahead with the decision to attack Kuwait. That action was then used by the US as a pretext for the invasion of Iraq. 1. https://adst.org/2016/02/a-bum-rap-for-april-glaspie-saddam-...

What's the relevance?

Re: Why does the U.S. always run a trade deficit?

#238

Post by sorcerer-mar »

throw_m239339 wrote: post #214
sorcerer-mar wrote: post #139

Earlier quoted context omitted.

There's more manufacturing than there ever has been in the United States. It doesn't make low value-added goods like TVs, it doesn't employ a lot of people, and it's not growing as fast as other sectors, but we still manufacture more than ever before. The “crumbling” sensation is because fewer people are employed by it and more people are employed (and earning more) in other sectors.

> It doesn't make low value-added goods like TVs, it doesn't employ a lot of people, and it's not growing as fast as other sectors, but we still manufacture more than ever before. Yes, aerospace and military tech are the biggest manufacturing industries in USA... Quite profitable these days with all these conflicts...

What's the relevance?

Re: Why does the U.S. always run a trade deficit?

#239

Post by Vicarium »

jandrewrogers wrote: post #212
actionfromafar wrote: post #132

Earlier quoted context omitted.

Even more sad that the US chose NOT to invest this surplus, for instance in infrastructure, education and a sensible health system.

The US spends $1T on education. It is extremely difficult to justify spending more when the US already spends far more per student than other developed countries. Same with infrastructure and healthcare. Without accountability for where that money went it would be foolish to throw even more money at it. Also, in the US, infrastructure, education, and healthcare is primarily the responsibility of individual States, so…

Its never competency and focus. Individual influence averages out, its the system that creates the result at scale.

To some extent higher per-student fees are expected in certain areas, most countries with heavily funded education aren't facing the same issues of rural population density. There's a lot of overhead costs to run so many schools.

Then state policies and regulatory capture is the other side of course, all schools need X teaching aid from Y company for some obscene markup...

Re: Why does the U.S. always run a trade deficit?

#240

Post by analog31 »

cvwright wrote: post #162
hunglee2 wrote: post #44

Earlier quoted context omitted.

yes indeed - it has been conflated with the decline of US manufacturing. Reality is the most significant export of the US is the USD itself - that is the trade good which everyone must have (at US insistence)

Problem is that the USD factories don’t provide enough jobs for the US population

Unemployment is roughly 4%.
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