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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?

#731

Post by fakedang »

s1artibartfast wrote: post #714
fakedang wrote: post #619

Earlier quoted context omitted.

The US economy still hasn't "rebounded" from the effects of the 2008 recession, forget COVID, even after the bailouts and the offloading of the US debt onto Europe, Japan and China, even though that was in the order of single digit trillions. I don't know where people get the idea that adding a hundred trillion more is where you can cure the deficit. Especially when this time around, you're not going to have EU, Chin…

>.That requires intense taxation for a few years on the rich and corporations alike, and using those proceeds to pay it off. This is your bias and preference seeping in. Simply put, you need to balance your budget. The US already has some of the highest corporate taxes in the world. Most countries don't rely on them, and instead focus on the individual pass through profits. most European democracies tax the middle cl…

There are so many loopholes in the current tax system. And I say this as someone who benefits massively from the status quo. But like I said, where else can the govt get the cash to "balance the budget"?

And again, European democracies aren't the ideal here when we're talking about balancing the books. Look to the American 1950s and the Clinton Era for better role models.

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

#732

Post by jerkstate »

bumby wrote: post #693
jerkstate wrote: post #680

Earlier quoted context omitted.

It’s fallacious that manufacturing can’t be done competitively in the US, it absolutely can, but policy allows business owners to make slightly more profit by offshoring production, so that’s what happens. Regarding fixing the infrastructure, I like that idea too, but the government is pretty incompetent and full of grifters so I don’t really think that’s an efficient way to get money to poor uneducated people - most…

> the government is pretty incompetent and full of grifters Is this based on actual data or just vibes from your interactions with the DMV, IRS, etc.? Michael Lewis writes well about this. His perspective is that the govt often shoulders the hard problems that lack a clear path to profitability for private industry. He’s studied govt extensively and seems to have the opposite view.

I know you aren’t the other guy, but it’s a really interesting argument that despite spending more and more money every year to solve this kind of problem, and seeing that the problem is getting worse (quality of life and economic security for uneducated people, in this case), one can still argue that the government is actually efficient and competent. It seems obvious to me that they are not successfully solving this problem with spending. I know a natural reaction is to blame one political party or the other for being especially bad, but you can see a lot of examples of failures to improve outcomes despite increasing spending at the state and local levels for both parties in the US. So if a politician comes along and says you know what, let’s try to solve this problem with policy instead of spending, the people who are suffering listen to that, even if the outcome isn’t certain.

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

#733

Post by trgn »

tastyfreeze wrote: post #388
trgn wrote: post #309

Earlier quoted context omitted.

savings are a thermodynamical impossibility. real wealth decays (livestock will die, the roof over your head will leak, the bushel of corn will rot, ...). savings must be invested for it to have future value.

If only there was some material that didn't degrade over time and is hard to produce. Somebody should invent something like that.

It's circular. Sure it's pegged to metal, but won't tell you how much corn or land or homes you can buy with it. What should one oz of gold, hoarded in 2025, be able to buy you in 2050? Many factors will determine that. Theres no such thing as fixed value, unless the definition is self referential.

The only thing to do is turn present day savings in capital, it's the only claim one can have on wealth in the future.

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

#734

Post by Sohcahtoa82 »

chii wrote: post #639
ta1243 wrote: post #585

Earlier quoted context omitted.

The wealthiest 10% of America have increased the ownership of wealth from about 40% in the 1970s to 70% today, with no sign of slowing. A typical HN techbro may not care because they're likely in the wealthiest 35 million, but the only way for the top 3 million / 1% to continue growing at the same rate once the bottom 90% have nothing more to lose is to take the wealth from the 32 million between 1% and 10%. It took…

wealth isn't a zero sum game. Not to mention that it's a false dichotomy to claim that the wealth increase could only have came from taking it from someone else.

From a purely theoretical standpoint, you're correct.

In reality, it definitely feels like zero sum when the government moves to eliminate social programs so they can give a tax break to the rich.

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

#735

Post by AnimalMuppet »

tastyfreeze wrote: post #666
analog31 wrote: post #640

Earlier quoted context omitted.

Thats the inflation adjusted curve, meaning it's what gold can buy relative to what a dollar can buy.

In 1900 a 20 dollar coin contained 0.9675 ounces of gold. An ounce of gold was legally defined as $20.67. No free floating gold price. A dollar coin contained 1.672 grams of gold. 1900 $1 is equal to 2025 $172 So a single dollar today will buy 1/172 of what it would in 1900. That is inflation. Not an inflation adjusted curve. Just the drastic devaluation of the dollar.

A single dollar today will buy 1/172 of what it would in 1900, as long as what you're buying is gold. If you are buying anything else, though, your number is not relevant. And that means that your number is useless, because it's only the number if you're buying gold, and gold is almost never what we actually want to buy.

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

#736

Post by p_j_w »

chabska wrote: post #584
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...

I didn't "choose" these, they are standard metrics used by industrial analysts. You know, the people who plan port expansions and cargo ship purchases, they need to deal with the actual tonnes of goods moved, not the dollar value of those goods.

Why should tonnage matter more than value? Would you rather have 10 tons of dung or 1 ton of smartphones?

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

#737

Post by codingbot3000 »

koolba wrote: post #172
ryandrake wrote: post #155

Earlier quoted context omitted.

Out of all the many industries out there, I don't understand why we keep glorifying and romanticizing manufacturing and trying to "bring it back." Depending on what you are manufacturing, it can be a very boring, stressful, stinky, physically taxing, or dangerous job. And it really doesn't pay well. It may have paid well 70 years ago, but it doesn't today, and you can't turn time back. A lot of customer service and t…

> Out of all the many industries out there, I don't understand why we keep glorifying and romanticizing manufacturing and trying to "bring it back." It’s a matter of national security. Look what happened during Covid when we couldn’t produce basic medical necessities at scale. If you go to war, do you think your adversaries are going to supply you with tanks and medicine?

That is a very good reason for trade barriers, much better than the trade deficit. And the barriers could be introduced in a far less disruptive manner, that allows companies to plan long-term. So I guess whoever stresses the US trade deficit, does not really care about national security, otherwise they would say so directly.

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

#738

Post by sorcerer-mar »

jerkstate wrote: post #732
bumby wrote: post #693

Earlier quoted context omitted.

> the government is pretty incompetent and full of grifters Is this based on actual data or just vibes from your interactions with the DMV, IRS, etc.? Michael Lewis writes well about this. His perspective is that the govt often shoulders the hard problems that lack a clear path to profitability for private industry. He’s studied govt extensively and seems to have the opposite view.

I know you aren’t the other guy, but it’s a really interesting argument that despite spending more and more money every year to solve this kind of problem, and seeing that the problem is getting worse (quality of life and economic security for uneducated people, in this case), one can still argue that the government is actually efficient and competent. It seems obvious to me that they are not successfully solving thi…

What government jobs programs have we been dumping increasing amounts of money into with diminishing returns?

Seems to me your logic actually applies to the argument of not doing that, and letting the free market figure it out.

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

#739

Post by 542354234235 »

datavirtue wrote: post #722
abirch wrote: post #687

Earlier quoted context omitted.

This is the exact same as automation. We need to be sure that we take care of those who lose their jobs. Truck Driver is one of the most popular professions in most states but the end is coming soon: https://www.cnn.com/2025/05/01/business/first-driverless-sem... you can imagine that they'll only need drivers that aren't on interstates or for inclement weather.

People who lose their job need to take care of themselves. That's the only way it works. You can only make it easier on them and enable success. Teaching kids real fincial literacy and how to leverage derivatives is an approach to solving this problem (most adults can't even grok a check book). Save while you can and preserve and multiply your wealth. In the typical truck driver world they have zero market participat…

> People who lose their job need to take care of themselves.

This feels incredibly simplistic. Taxpayer dollars go into funding tons of research that has led to automation improvements. Why shouldn’t taxpayers get some sort of return on that investment? When the US government negotiates trade deals, the money the country “saves” could go anywhere, to anyone. Why does almost all of it go to companies and not taxpayers? If a company wants to offshore work, why do they get to keep all of the monetary difference for themselves, instead of paying a substantial portion back to the country? Privatize the profits, socialize the costs doesn’t have to be how we allow companies to operate.

“Help themselves” assumes that all the other factors are some sort of unchangeable natural laws, and not laws and regulations chosen. We could choose different rules that more directly returned gains to taxpayers, instead of vague trickle down type benefits.

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

#740

Post by bumby »

jerkstate wrote: post #732
bumby wrote: post #693

Earlier quoted context omitted.

> the government is pretty incompetent and full of grifters Is this based on actual data or just vibes from your interactions with the DMV, IRS, etc.? Michael Lewis writes well about this. His perspective is that the govt often shoulders the hard problems that lack a clear path to profitability for private industry. He’s studied govt extensively and seems to have the opposite view.

I know you aren’t the other guy, but it’s a really interesting argument that despite spending more and more money every year to solve this kind of problem, and seeing that the problem is getting worse (quality of life and economic security for uneducated people, in this case), one can still argue that the government is actually efficient and competent. It seems obvious to me that they are not successfully solving thi…

With respect, I asked for data and you came back with “it seems obvious to me…” without citing any real data. I know enough to know people who make feelings-based arguments can’t be persuaded by data-driven discussions.
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