If you buy things that are productive you come out ahead on a trade deficit. If you buy things that are consumptive you are pawning future productive capacity of the country. Every country does both, obviously, what matters is the overall balance. The US has notably (as in quantified by economists, civil engineers, people who study urban planning etc.) failed to invest in productive infra for quite a while now.
Why does the U.S. always run a trade deficit?
801–810 of 814 posts
Re: Why does the U.S. always run a trade deficit?
#802I assume that the New York Fed would like Americans to be more patriotic, save more, and buy less cheap imported crap, that's why they wrote this article in this way. But it skates past a few key issues. 1. Consumption doesn't zero out, because domestic consumption in the USA is mostly spent in China, not in the USA. That is what contributes to the trade deficit, not lack of saving. 2. Asset price inflation contribut…
The second point is very important. Money is created as debt and asset price inflation is one major mechanism to achieve this. There are other mechanisms too, like market value inflation. Companies with a huge hype, say Open AI, can raise money as debt and that will be just created by private banks out of thin air.
Re: Why does the U.S. always run a trade deficit?
#803I assume that the New York Fed would like Americans to be more patriotic, save more, and buy less cheap imported crap, that's why they wrote this article in this way. But it skates past a few key issues. 1. Consumption doesn't zero out, because domestic consumption in the USA is mostly spent in China, not in the USA. That is what contributes to the trade deficit, not lack of saving. 2. Asset price inflation contribut…
> Domestic saving is in no way equivalent to productive investment in the US economy. Are people keeping money in their mattress considered accounting discrepancies? Companies hoard cash like dragons. What investment in USA? Have you seen much new equipment or new factories? What investment means here is pumping up USA asset prices, it stretches the definition of the word investment to the absolute limit. Domestic sa…
> This is completely nonsensical. Banks (eliding a lot of important details about money and loan creation) use money in those accounts to make loans,
No, banks do have to have a set minimum ratio of the credit to deposited money and that ratio is always higher than one. Private banks create money buy giving loans leveraging the savings at hand with the assumption of there won't be a bank rush. If a bank rush occurs no bank on earth will be solvent.
Re: Why does the U.S. always run a trade deficit?
#804Earlier quoted context omitted.
It is well known and established that stats favor rhetoric, and by extension lack credibility as fact. If you can't guarantee the expected methodology conformed in collection, bad data in causes bad data out, its worse than no data at all.
Occasionally, I wish I commented often enough to get downvote privileges.
Occasionally, I do to.
Are you trying to say that China doesn't fabricate and lie about their metrics and collection methodology? because I hate to be the one to break this to you, it does and there's a lot of news coverage on it going back over a decade.
https://www.scmp.com/economy/economic-indicators/article/324...
https://sites.lsa.umich.edu/mje/2023/05/01/why-the-world-is-...
https://dialogo-americas.com/articles/china-withholds-manipu...
Re: Why does the U.S. always run a trade deficit?
#805Earlier quoted context omitted.
Were those panics ultimately bad for growth? The US in the 1800s was one of the fastest growing economies we've ever seen in all of human history; growing from ~0% to ~20% of the world economy. It isn't often someone outpaces that. The gold standard clearly didn't limit growth in any concerning way if you are associating it with one of the top 10 all time growing economies. In fact, dropping the gold standard has bee…
If you don't think panics are a bad thing I don't know what to tell you. Can you point to a panic that was good? My point about Bryan is that the gold standard was causing so much pain that he rode his solution to the nomination. That his solution (bimetallism) was terrible helps explain his loss.
All panics are "good" in the sense that they represent the economy reorienting themselves to maximise returns. As you accidentally stumbled over, they are associated with the period of US history with the highest growth rate. The argument is basically that they are a necessary mechanism to purge inefficient actors from having capital. It isn't pleasant if the market tags a person as inefficient, but that is how to get to high growth.
It isn't like getting rid of the gold standard has helped the US grow, since then we've have seen them mean regress from being an unchallengeable global colossus to arguably the #2 economy. The government printing money at will and handing it out to asset owners who by rights should be going broke is a component of that.
If you'd like a computer metaphor, possibly think a program unexpectedly spitting out a stacktrace. The stacktrace is not, in and of itself, the problem. The problem is the thing causing the stacktrace and the stacktrace is actually helpful for diagnosing. In the case of economies, panics don't draw attention to the problem but actually fix it directly.
> ...that he rode his solution to the nomination
A lot of nominees around that time thought the gold standard was a good idea, which doesn't prove anything either. The opinions of nominees more than a century ago aren't really evidence. It is an appeal to authority except he wasn't an authority in any meaningful way. He didn't know much about economics and turned out not to represent the consensus of ordinary citizens either.
The US has not actually put leaving the gold standard to a vote as far as I know. In fact I don't think the current situation is a result of big deliberations, at Bretton Woods people thought they were agreeing to a gold standard and as the US's economy is eclipsed we might easily see a rethink of the global trade system where it comes back.
Re: Why does the U.S. always run a trade deficit?
#806Earlier quoted context omitted.
Occasionally, I wish I commented often enough to get downvote privileges.
Occasionally, I do to. Are you trying to say that China doesn't fabricate and lie about their metrics and collection methodology? because I hate to be the one to break this to you, it does and there's a lot of news coverage on it going back over a decade. https://www.scmp.com/economy/economic-indicators/article/324... https://sites.lsa.umich.edu/mje/2023/05/01/why-the-world-is-... https://dialogo-americas.com/article…
From one of the sources you provide:
"reported by the state-run People’s Daily newspaper"
This sounds like a case of honesty, not the other way around.
Re: Why does the U.S. always run a trade deficit?
#807Earlier quoted context omitted.
It's a necessary but not sufficient criterion.
> No, in order to win a war, it must have a clear objective which can be successful. You said no.
I did, all the logistical prowess in the world can't help when your objective is too vague. Logistics are useful, often key to the final outcome, but they're nowhere close to the necessity of clear objectives.
Re: Why does the U.S. always run a trade deficit?
#808Earlier quoted context omitted.
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.
okay, but if the system is corrupt and inefficient then throwing more money at the problem will just make it worse
That's my point aha. That corruption needs to be burnt out.
Re: Why does the U.S. always run a trade deficit?
#809Using 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…
Plus one thing that was never really mentioned during the tariff bs where many American republicans demonstrated a total lack of understanding of what tariffs are and how they work is: The fact that, yes, China makes iPhones and America has to import them. However that completely ignores the fact that China is making iPhones for _Apple_ and that whilst I'm sure the Chinese factories make a little profit, Apple's is m…
Follow up: and Trump again today with the 'The president also threatened to impose a 25% import tax "at least" on iPhones not manufactured in America.'
Lmao the profit from Chinese companies (or India, etc) manufacturing the iPhone is so, so much less than the profit that Apple makes selling the iPhone.
Honestly just ridiculous. I was hoping he'd stick with the insane tariffs so I could watch Americans mob & oust him. But he's backpedaled as he is wont to do, the absolute cretin.
Re: Why does the U.S. always run a trade deficit?
#810Earlier quoted context omitted.
Occasionally, I do to. Are you trying to say that China doesn't fabricate and lie about their metrics and collection methodology? because I hate to be the one to break this to you, it does and there's a lot of news coverage on it going back over a decade. https://www.scmp.com/economy/economic-indicators/article/324... https://sites.lsa.umich.edu/mje/2023/05/01/why-the-world-is-... https://dialogo-americas.com/article…
From one of the sources you provide: " reported by the state-run People’s Daily newspaper " This sounds like a case of honesty, not the other way around.
They only started blaming the locals once there was concrete proof internationally where they were caught in the lie, and there is plenty of material all of which support this; not just the ones I linked.
Shame is one of the worst things for Chinese culturally.
The fact is, this is not in doubt, and it wasn't a one time thing but rather a consistent effort. Do a simple google search, look at the dates of the articles, they go back decades.
Its well established at this point that this is what one must expect with them.