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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?

#561

Post by herbst »

CyanLite2 wrote: post #71

Because the USA has more money than other countries. People outside the US can't afford to buy our products, but we can afford to buy theirs. This is ideal for many people in the US who want cheap $200 flat screen TVs in every room of their house. This isn't good for unskilled labor in rural parts of America, often in swing states. Manufacturing had always been a place for high school grads to have a decent career. T…

Swiss checking in. No idea what you even talking about. Do you think we don't have 200$ flat screens?

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

#562

Post by int_19h »

jajko wrote: post #528
TacticalCoder wrote: post #346

Earlier quoted context omitted.

[flagged]

Whats stopping you? You sound like jaded old fool who made some serious irreversible mistakes in their lives, and now just overflowing with regret and hate. EU may be foolish in some aspects, I agree there, but life quality as in actual daily levels of stress, happiness, quality of life, quality and costs of basic services that take care of weak (which one day you will inevitably become too) is stellar and parsecs be…

The question is whether this life quality is sustainable long term.

Of course, the same goes even more so for US.

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

#563

Post by AnIrishDuck »

biorach wrote: post #555
AnIrishDuck wrote: post #534

Earlier quoted context omitted.

You, of course, can choose these as your units of value. I think it is telling that the rest of the world (particularly the central banks of most countries) have instead chosen USD (well, more specifically US treasuries) as their preferred store of value. Well, at least, for now...

(Not the person you were replying to) You asked a question, they answered in good faith, and now you've dismissed their answer. I would also point out that you're dismissal is actually about a related, but separate issue - you've suddenly started talking about preferred store of value, when your original question was about how to value production. I don't think you're arguing in good faith.

I pointed out they were providing ridiculous answers to the question of "how do you measure value" and they doubled down on the ridiculous.

You are correct, there are many ways to measure value.

However, I don't think picking various commodities as the "true" measure of what is "valuable" is a useful exercise.

You may disagree. That's fine! I suggest you put your wisdom to use on the various markets that are set up for this purpose instead of arguing with me.

EDIT: they ultimately never reached my main point anyway, which is: regardless of if you measure value in tons of steel or crushed coconut shells, if China could easily obtain that value by assembling this stuff themselves, why export all the inputs to us instead?

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

#564

Post by trade2play »

epistasis wrote: post #406
hunglee2 wrote: post #35

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…

It is utterly baffling to me that some Americans see the massive amount of free goods that they get as part of being the reserve currency with trade deficits, and somehow think "hollowed out manufacturing" rather than all that cheap stuff we get. The rest of those countries that are manufacturing things are far far poorer, and desperate to switch to industry higher up in the value chain, where the US is. And a half-a…

Play it forward a half century.

Physical productive capacity is gone. Your global competitor is the de facto production hegemon. Debt has ballooned, and you can’t fund welfare programs. A big chunk of your country’s assets are owned by foreign investors.

But yes, you got a lot of cheap things before the music stopped.

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

#565

Post by herbst »

sunaookami wrote: post #147
jleyank wrote: post #140

Because US-ians want to buy cheap sh*t in Walmart. On the whole, they seem to prefer cheap to durable/costs more. So USD flow to places with cheaper goods and then flow back as investments.

More expensive hasn't meant "more durable/reliable" for years now.

Not for everything, but in Europe we still value this kind of culture and there are still many examples where it's true.

We spend a lot more on food for example, and half of the US produce is basically illegal here because of the low quality.

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

#566

Post by powerapple »

c-linkage wrote: post #86

I've always disliked economics because it never seems to make much sense. The first equation in the article -- the basis on which the entire premise rests -- just feels wrong. > Spending is either on the consumption of goods and services or investment spending on equipment, structures, and intellectual property products. Income is allocated to either consumption or to saving by households, businesses, and government.…

Other people's consumption is your income, not production, producing does not generate income by itself.

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

#567

Post by Ray20 »

aylmao wrote: post #480
jorts wrote: post #448

Earlier quoted context omitted.

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.

China is automating at an impressive rate. Isn’t automation easier to face with population decline than with population increase? I’d imagine young people mind getting replaced by machines more than old people.

>Isn’t automation easier to face with population decline than with population increase?

No? These things do not seem to be connected in any way.

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

#568

Post by biorach »

AnIrishDuck wrote: post #563
biorach wrote: post #555

Earlier quoted context omitted.

(Not the person you were replying to) You asked a question, they answered in good faith, and now you've dismissed their answer. I would also point out that you're dismissal is actually about a related, but separate issue - you've suddenly started talking about preferred store of value, when your original question was about how to value production. I don't think you're arguing in good faith.

I pointed out they were providing ridiculous answers to the question of "how do you measure value" and they doubled down on the ridiculous. You are correct, there are many ways to measure value. However, I don't think picking various commodities as the "true" measure of what is "valuable" is a useful exercise. You may disagree. That's fine! I suggest you put your wisdom to use on the various markets that are set up f…

> I don't think picking various commodities as the "true" measure of what is "valuable" is a useful exercise.

No one said that a commodity is a "true" measure of value. A commenter simply said that it is often a useful proxy. It is something that is useful to do to understand specific trade patterns.

> I suggest you put your wisdom to use on the various markets that are set up for this purpose instead of arguing with me.

I did not claim any wisdom on the subject. And I suspect you are deflecting attention from the fact that you are not arguing in good faith

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

#569

Post by jampekka »

starspangled wrote: post #545
mrtksn wrote: post #526

Earlier quoted context omitted.

The reserve currency status makes all the difference on how much of all this you can do and under what conditions. That's the difference and that's why US had it so good for so long and now is due for such a large correction. Also, US is blessed with huge natural reserves, didn't actually waste it all on drugs and alcohol but did in fact created some of the best institutions in many areas so maybe it wouldn't be that…

It's not a reserve currency because the US decided it is, it's a reserve currency because everybody else decided it is. They decided that because they decided it was in their own best interest to trade in and maintain reserves of USD. But whatever difference it makes is still just a matter of degrees. Countries keep reserves of and trade in currencies other than USD. Some get more benefit than others from this, and t…

USD became the reserve currency in the Bretton Woods, when it was pegged to gold and major currencies were pegged to USD. This was pretty much demanded by US in the Bretton Woods conference.

In 1971 US unilaterally scrapped the Bretton Woods and essentially stole the gold reserves. Other countries protested heavily but could not really do much.

US then transitioned to the petrodollar system where demand for and value of the dollar is/was ensured by dollar monopoly in oil trade. This was done with deals with oil producing countries with varying levels of coercion.

Granted it is in a country's best interest not to piss off the world's largest military. Silver or lead is a decision too.

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