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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?

#591

Post by avidphantasm »

mrtksn wrote: post #504
starspangled wrote: post #369

Earlier quoted context omitted.

> It gets massive amounts of products and services enabling the US residents live well beyond their means. What does this mean really? That is their means. For a somewhat topical example, people of Australia get access to cheap medications (in part because they pay to subsidize the cost of them but also because) their government negotiates with pharmaceutical corporations to pay lower prices. This kind of negotiation…

For other countries USD is something they have to work for or sell something to acquire it. If they screw up they may end up in crisis being unable to obtain USD. Borrowing in their own currency will be much more limited and borrowing in USD much more costly. USA on the other hand can just print it out of thin air and because the global USD liquidity is huge they can do it for much longer without facing the consequen…

Thank you for elucidating the fact that US “borrows” in its own currency and so as long as we have monetary sovereignty (which we do to a great degree due to USD being the global reserve currency) we have no deficit problems (as long as we keep inflation in check).

I implore everyone reading this thread to read up on Modern Monetary Theory (MMT). Stephanie Kelton’s “The Deficit Myth” is a good place to start. Until more people have a better understanding for how the system works, they’ll continue to be confused and easily led astray by politicians who don’t have the best interests of most people in mind, but instead wish to rob us blind in a vain attempt to eliminate trade/budget deficits.

(Note: I’m very much for restoring domestic manufacturing as much as possible, including the use of highly targeted tariffs, industrial policy, R&D, workforce development, etc. but this is not what the current administration is doing, not even close).

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

#592

Post by jajko »

esseph wrote: post #69
lesuorac wrote: post #62

Earlier quoted context omitted.

Isn't that just a software thing (if at all)? It's not like Canadian lumber mills conquered the world. Ford F-series isn't the highest selling car in the world.

How many countries are US fast food franchises in? Music? Movies? Bleed over from US social media? There's something to that, I think.

US fast food slowly spreading like a cancer to cater to lowest social layers ain't something to be proud of. Their products are of much lower quality and taste. Basically spreading obesity, diabetes and cancer further by attacking lowest reward cycles in minds that have lowest control mechanisms.

Its like being proud in pushing PFOAs or BPAs on whole world. Nobody goes around and celebrates Thomas Midgley Jr. or inventor of fentanyl, do we.

Also, this year any US product is much more avoided on purpose, that goes also for pop culture. I specifically avoid them unless they are top of the market by big margin for given money. orange man achieved what many couldn't do in their whole careers - wake up Europe from its cozy naive and stupid sleep.

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

#593

Post by oblio »

AnIrishDuck wrote: post #541
motorest wrote: post #538

Earlier quoted context omitted.

> Growth is trivial to achieve when you are starting from zero. China currently reports the second highest GDP in the world.

> For decades, China's GDP growth towered over the US's. It's much easier to 100x $1k than to 10x $1m. This is not to take away from the achievements of the Chinese economy, which are gargantuan. You just can't linearly extrapolate growth rates.

> It's much easier to 100x $1k than to 10x $1m.

That's kind of goes against the conventional wisdom, which largely feels true in my experience, that "the rich get richer". Countries are a bit different, but China looks poised to avoid the middle income trap up to a point, and even if they don't, their "middle income" is a lot more likely to fall somewhere near the Japanese levels, which would make the Chinese economy massively bigger than the US one, by 2050.

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

#594

Post by metalman »

amazing how successfull the "deficit" narative is for the country that somehow gets the largest share of the worlds real comodities and goods shipped to it's shores in exchange for some "currency" pulled strait from the iether! and as someone said, If I owe a thousand dollars, it's my problem, but if I owe 5 million, it's the bank's problem, so I think it is a good idea for me to run a bit of a personal "deficit", you know just to do my part, and be a good citizen, hard as it is to take all that stuff, someone has to do it, but realy it's not fair, no not fair to get all the stuff and hand out IOU's for some stuff that I just have to mark up a bit, no not fair, all the time and trouble marking my stuff up, in fact I think I need to be compensated for marking my stuff up

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

#595

Post by teamcampapp »

oblio wrote: post #593
AnIrishDuck wrote: post #541

Earlier quoted context omitted.

> For decades, China's GDP growth towered over the US's. It's much easier to 100x $1k than to 10x $1m. This is not to take away from the achievements of the Chinese economy, which are gargantuan. You just can't linearly extrapolate growth rates.

> It's much easier to 100x $1k than to 10x $1m. That's kind of goes against the conventional wisdom, which largely feels true in my experience, that "the rich get richer". Countries are a bit different, but China looks poised to avoid the middle income trap up to a point, and even if they don't, their "middle income" is a lot more likely to fall somewhere near the Japanese levels, which would make the Chinese economy…

[dead]

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

#597

Post by nis251413 »

starspangled wrote: post #369
mrtksn wrote: post #115

Earlier quoted context omitted.

US doesn't just get political influence. It gets massive amounts of products and services enabling the US residents live well beyond their means. China for example, sends huge number of electronics and all kind of other consumer goods that Chinese produce by sweating in 12 hours shifts in 6 day work weeks in exchange for imaginary numbers. US is definitely not the victim here. There's the risk of this system stop wor…

> It gets massive amounts of products and services enabling the US residents live well beyond their means. What does this mean really? That is their means. For a somewhat topical example, people of Australia get access to cheap medications (in part because they pay to subsidize the cost of them but also because) their government negotiates with pharmaceutical corporations to pay lower prices. This kind of negotiation…

> What does this mean really? That is their means.

The "means" is being able to print trillions of imaginary dollars with value that magically pops into existence, merely backed by the fact that other nations do not want USD to lose value because they invest in it.

US did not care about trade deficits because they were able to just print dollars without having dollar itself devalued, which is what happens if any other nation decides to print currency without having a way to back its value. Because the US status as global hegemony is getting challenged, these trade deficits may become an issue. But trade deficits were not an issue until now (and they still are not as long as they can keep printing dollars without hyperinflation happening).

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

#598

Post by Flemlo »

avidphantasm wrote: post #591
mrtksn wrote: post #504

Earlier quoted context omitted.

For other countries USD is something they have to work for or sell something to acquire it. If they screw up they may end up in crisis being unable to obtain USD. Borrowing in their own currency will be much more limited and borrowing in USD much more costly. USA on the other hand can just print it out of thin air and because the global USD liquidity is huge they can do it for much longer without facing the consequen…

Thank you for elucidating the fact that US “borrows” in its own currency and so as long as we have monetary sovereignty (which we do to a great degree due to USD being the global reserve currency) we have no deficit problems (as long as we keep inflation in check). I implore everyone reading this thread to read up on Modern Monetary Theory (MMT). Stephanie Kelton’s “The Deficit Myth” is a good place to start. Until m…

I don't think domestic manufacturing works anymore.

The pressure to automate will just skyrock.

I'm more for a global currency which will be given to everyone who does certain jobs we can't automate away or don't want to like nursing, teaching.

Everyone around the globe can get worldfiat when they do these jobs.

We need to start thinking beyond known capitalism in a modern highly automated world.

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

#599

Post by tonyhart7 »

tonyhart7 wrote: post #79
ta1243 wrote: post #10

Earlier quoted context omitted.

If iphones were charged with US labor costs then nobody would buy them

"If iphones were charged with US labor costs then nobody would buy them" idk, people pay premium for avocado sandwich a lof of cali folks certainly would do that

idk why people have negative sentiment on this

its the same like "health" food product vs industrial food

You can have option for product that got manufactured on US soil to support US worker vs cheaper product that manufactured in Asia because cheaper wages

in fact European,Asian country do this all the time

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