461–470 of 814 posts
Using a national currency as the de facto global reserve guarantees a trade deficit for that country. No one else can manufacture USD's, so other countries have to acquire them by shaping their economies to supply goods and services demanded by the US. They can then use these earned dollars to transact with other countries, as the US itself insists they do. For the US, this is a simple trade off - gain massive politi…
Services aren't added in the equation. With services, like Netflix, Office365, etc, the US runs a trade surplus.
Using a national currency as the de facto global reserve guarantees a trade deficit for that country. No one else can manufacture USD's, so other countries have to acquire them by shaping their economies to supply goods and services demanded by the US. They can then use these earned dollars to transact with other countries, as the US itself insists they do. For the US, this is a simple trade off - gain massive politi…
>> all USD transactions go through US institutions regardless of where those transacting partners are located. Do they? It is my understanding that the (originally London based) Eurodollar market deals in USD without US treasury oversight. As will Hong Kong soon.
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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…
And how much of that money actually goes to educating children vs. In the back pockets of all the private enterprises that so many love to espouse. It's like the majority of us were born to be peasants, so many people are quite happy to give the rich tax breaks for example, as long as their own taxes don't go up. Money's gotta come from somewhere.
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That $1T isn't an expense. Part of it is operational, meaning keepiong boats and bases running around the world, which earns the US yet more influence and soft power and unearned media. Much of it is acquisition costs, meaning $ going into a US defense tech for research and procurement of the most advanced hardware and maintenance of those industrial bases to do so; that hardware then gets sold to allies, among other…
Just because there is a soft power upside does not mean that it is a net positive. I often see this stated without any form of quantification. It is essentially a matter of faith.
The problem is really that the two aren't directly linked. If you operate at a trade deficit, you don't need to manufacture at home. But if you can't manufacture at home, you can't build war machines efficiently, so you can't be the world police and ensure the market needed to operate at a trade deficit.
By defunding the military you're pulling the rug out from under yourself in this sense. I would still agree that it's massively inefficient and needs to be fixed, but the working US-World system would still invest a lot of funding into the military.
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> If the $450 of value was so easy to extract, why wouldn't China simply assemble it in their own country and take the whole pie? If you pay attention, you'll notice that's what China is doing. For decades, China's GDP growth towered over the US's. Around 2015, China's GDP PPP overtook the US's.
China’s GDP growth is great but they will face a huge pain now that they face an unsustainable population decline. They have more people aged over 52 than younger. I empathize with their youth.
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> US manufacturing output is double that of China's on a per-capita basis. Only on a dollar value basis. And that's heavily skewed on how an item's value is calculated. When you use $50 of parts (all made in China) to assemble a machine that you sold at $500 , $50 of GDP value is attributed to China while $450 of GDP value is attributed to the US. But who did more "manufacturing"?
> Only on a dollar value basis. Uh, yes. > And that's heavily skewed on how an item's value is calculated. An item's value is calculated according to what it is bought and sold for. That's how value is determined. What would you rather it "skew" towards? > When you use $50 of parts (all made in China) to assemble a machine that you sold at $500 , $50 of GDP value is attributed to China while $450 of GDP value is attr…
In the pre-tariff omnishambles world, I could buy a more or less equivalent widget for $18 branded with a recognizable American brand, for $12 as a KWJIBO non-brand delivered from Amazon, or for $6 more-or-less manufacturer direct from AliExpress.
Amazon added $6 of value by saying "I can get it to you in a timely manner and offer a confidence-reinforcing return policy."
The American brand added another $6 of value for "this can probably be sourced consistently and people won't look at you weird trying to get it Shenzhen Tchang Zu Shrimp Cannery And Electrolytic Capacitor Plant #5 onto the approved vendor list."
They didn't actually improve the widget itself, just logistics around it. That means their value-add is extremely tenuous, and has a limited moat.
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Exporting business ownership when seen on a national level is just another form of debt. You're trading future production for stuff now. The fundamental problem is that the balance of goods flows into the US today. If debts and profits are going to be paid out eventually that will have to reverse. But it's going to be politically impossible for the US to ever send out 5-10% of its GDP in goods. That's the fundamental…
You've fallen into the exact zero sum thinking trap that the parent comment mentioned. If investment causes the overall pie to be bigger, then both sides win with no tradeoff. > If debts and profits are going to be paid out eventually that will have to reverse. No it absolutely won't. The US exports financialization and technology services which don't show up on a trade deficit chart but do materially make the US and…
The economy is _not_ a zero-sum game. The world economy is _not_ a zero-sum game. Trade very much _is_ a zero-sum game because all the exports of all the countries have to be equal imports in the others -- worldwide imports and exports must net to zero. GP's point, if I understood it -and idk if it's correct-, is that to pay off our debt we'll have to export more than we import, but that the rest of the world will not allow that. The part of GP's argument that sounds like "zero-sum games" is about world trade, and world trade is zero-sum even though the world economy is not zero-sum.
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> What does this mean really? That is their means. It means Americans are providing mainly a financial service, by managing the dollar. The value of their currency therefore doesn’t accrue from a real economy, which, by definition, only includes consumer goods and services.
Even if we take what you wrote as fact, that does not answer how it is living beyond their means if their means includes "providing mainly a financial service, by managing the dollar".
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> but indebtedness and the future having to pay up for the spending of the past The debt is denominated USD, the US mint could hypothetically print a trillion dollar note and settle the debts. Doing so would wreck trust in the existing system - so it's not just about the debt, but people tend to gloss over how much control the US has over the debt, so the indebtedness (in USD) is a relatively small factor overall.
Inflating away the debt is a default in all but name, with the same results. If I pay you 50% of what I owe, or 100% reset to half the value. Both burn creditors and ruin credit.