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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?

#251

Post by mitthrowaway2 »

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?

The point of backing currency with gold is to overcome low trust, or a potential future breakdown in trust. A claim to infrastructure that can simply be nationalized during a dispute / a military coup / etc, is not really serving the same purpose that a gold standard serves.

Plus, now you've somehow got to manage price controls on ports and infrastructure...

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

#252

Post by timacles »

kylebenzle wrote: post #81
ta1243 wrote: post #10

Earlier quoted context omitted.

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

Maybe the military could just start forcing people to buy all US made products instead of just our currency?

Trust me they are exploring this

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

#253

Post by mc32 »

FirmwareBurner wrote: post #39
mc32 wrote: post #23

Earlier quoted context omitted.

Higher end Motorolas were mfg in the US in the early 2000s. It’s possible. Top of the line were ~$700, with inflation that’d afford iPhones. They were top sellers and not niche models.

Higher end Nokias were also 100% made in Finland, even the chargers. Companies just wanted that sweet Chinese labor.

I’ve no idea why people downvote the above claims.

Here from the Verge: https://www.theverge.com/2013/9/11/4717796/made-in-america-a...

As late as 2014 phones were being made in the US. I believe Nokia in Finland was similar…

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

#254

Post by treis »

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…

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 problem.

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

#255

Post by ty6853 »

mitthrowaway2 wrote: post #251
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?

The point of backing currency with gold is to overcome low trust, or a potential future breakdown in trust. A claim to infrastructure that can simply be nationalized during a dispute / a military coup / etc, is not really serving the same purpose that a gold standard serves. Plus, now you've somehow got to manage price controls on ports and infrastructure...

I've tried this point before but it always fails because the argument is, if I may contrive a straw man, that the government can simply machine gun everyone at the exits, take all the gold reserves, and cancel the notes. Therefore any government enforced asset is basically as good as gold in this regard because the government can and has (circa great depression) simply cancelled the trustless or bearer properties of gold.

Although you're right that this is historically a large element of gold exists it won't be accepted as reasoning, and it's not worth bothering on places like HN.

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

#256

Post by mitthrowaway2 »

alephnerd wrote: post #209
mitthrowaway2 wrote: post #194

Earlier quoted context omitted.

China definitely has industrial policy supporting its manufacturing, but the wages argument is begging the question. The USD, as the global reserve currency, is over-valued; if an alternative system were used (eg. the Bancor) and the Yuan allowed to float, then those 34,000 Yuan would buy a lot more and the median US wage would buy less.

Hypothetically yes, but the lack of social safety net means most of that hypothetical purchasing power expansion in China is moot. China has a medical debt problem [0], education pricing problem [1], and private sector capital crunch [2] similar to that of the US. This makes it much more difficult for the median household to spend in China because there is an incentive to keep saving. In isolation an $8,000 EV looks…

What I mean is that if the CNY properly appreciates relative to the US dollar, that CNY60k ($8,000) EV becomes a CNY60k ($16,000) EV. The median Chinese wage goes from CNY 34k ($5,000) to CNY 34k ($10,000). Meanwhile imports of agricultural products and other things into China becomes cheaper, and the cost of food gets lower.

Most expenses an average Chinese worker pays might be unaffected given how self-reliant China is, but in theory at least the wage gap between Chinese and US workers would close significantly this way, even if the gap in living standards do not.

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

#257

Post by mempko »

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…

It's not a zero sum game over the long term, but at any moment it certainly is. At any moment there is a certain amount of money and generally it gets redistributed to the wealthy. So it's mostly zero sum. Yes the pie grows over time but the distribution gets worse over time. We call this inequality and it's growing.

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

#258

Post by johnisgood »

rayiner wrote: post #13
nemomarx wrote: post #5

Getting real physical products in exchange for imaginary numbers and services is a good deal? We sell a lot of software?

Living on a farm and getting three square meals a day is a good deal… until it isn’t.

There are always trade offs. I want to live on a farm, but at the same time, I need a relatively quick access to hospitals.

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

#260

Post by mitthrowaway2 »

ty6853 wrote: post #255
mitthrowaway2 wrote: post #251

Earlier quoted context omitted.

The point of backing currency with gold is to overcome low trust, or a potential future breakdown in trust. A claim to infrastructure that can simply be nationalized during a dispute / a military coup / etc, is not really serving the same purpose that a gold standard serves. Plus, now you've somehow got to manage price controls on ports and infrastructure...

I've tried this point before but it always fails because the argument is, if I may contrive a straw man, that the government can simply machine gun everyone at the exits, take all the gold reserves, and cancel the notes. Therefore any government enforced asset is basically as good as gold in this regard because the government can and has (circa great depression) simply cancelled the trustless or bearer properties of…

I think the hope that international bearers would have is that thet can get their gold out when the future is looking risky, but before a breakdown in trust comes to that level. Once the revolution actually happens, Fort Knox is in enemy hands.
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