Dems say "trade deficits don't matter"....lets debate that stupid position

[kyzr]

I hear on CNN & MSNBC stupid people saying that trade deficits don't matter. Maybe they are socialists in a capitalistic country, but here are a few reasons why they are wrong.
1. If I have a trade surplus, you are either giving me your money, or borrowing money to pay me.
2. If I have a trade deficit, I am borrowing money to pay someone to buy stuff.

Countries with trade surpluses can buy factories and properties in debtor countries, their currency is strong, their credit rating is strong, just the opposite for debtor countries.

IMHO it is much better to have a trade surplus than a trade deficit.

It’s not a question with one answer for all occasions. There are many factors to be considered...current economy, growth rate, population growth, etc.

Do you want debt on an asset which is depreciating or appreciating?

Its not the microeconomic effect on an asset, its the macroeconomic effect on the US economy that concerns me. As I said in subsequent posts: foreign steel dumping causes our steel plants to close, foreign governments subsidizing foreign cars hurts domestic car manufacturing, foreign governments stealing intellectual property hurts long term US employment, etc. Good paying jobs don't grow on trees, Trump is working to create more good paying US jobs.

 

[kyzr]

Americans buy foreign goods with American dollars, which are then transferred to foreign account holders. The foreign account holder can only do four things with those dollars: 1) turn around and buy American goods, 2) invest them in American securities, 3) hold them in perpetuity and 4) exchange them for another currency.

The fact that a current account deficit exists demonstrates that foreigners are investing/holding more dollars than purchasing American goods. [1] Investments come back to American companies or governments in the form of capital, not consumer goods, which drives economic growth. [2] Foreigners who hold onto dollars and never use them are essentially trading real consumer goods for green pieces of paper, which is actually a net gain for American consumers. [3] Rather, the current accounts should be evaluated based on volume, not deficit or surplus.

Is a current account deficit good or bad for the economy? | Investopedia Is a current account deficit good or bad for the economy?

[1] This is one reason why Trump is trying to force foreign gov'ts to reduce their tariffs on our stuff coming into their countries. Lower tariffs imposed on our stuff makes them more competitive in terms of price, so we sell more of our stuff to others and as a result the negative trade imbalance goes down. You can bitch about his methods, maybe there's a better way but it's worth noting that no other president has found a better way of doing it.

[2] Foreign investments helps spur our economic growth. That's why Investments are a factor in determining the GDP number, and foreign investment is a part of that.

[3] If they didn't invest those dollars here and didn't buy anything with them, then that money is just lying fallow and doing nothing. I would think those dollars would be in a US bank account somewhere earning interest if nothing else, but then that is actually an investment cuz now that bank can loan that money out to a US business or person and more goods and services could then be produced.


Trade deficits in and of themselves really don't matter, it's what you do with those foreign products that really counts. If it's all consumption stuff then you really haven't increased US productivity in any way, right? But if you bought foreign materials and built and sold a product then it's a positive increase in GDP that is presumably greater than what you paid for the foreign materials. Consider this:


In terms of trade surpluses, the U.S. achieved its high-water mark in 1975. That was the last year it enjoyed a trade surplus – and a year when GDP growth was negative at -0.2%. The surplus was over $12 billion, but would anyone describe the U.S. economy at the time as something to emulate? It was a period when the nation seemed to be trapped in low economic growth, with high unemployment and inflation rates. Indeed, one of the reasons the U.S. had a trade surplus is because Americans had relatively little money to spend on foreign goods. Was the nation better off for it?

The United States isn’t the only country where trade balances do not reflect economic growth or wealth creation. If trade surpluses were a magic wand to make wealth appear, why hasn’t it done so in Angola, Ghana, Mongolia, Mozambique, or Uzbekistan, all of which enjoyed trade surpluses last year? (2016) For that matter, why has Japan’s continuing string of trade surpluses failed to lift its economy out of a 20-year-plus cycle of tepid growth and deflationary malaise? (A trend that Trump singularly failed to forecast in 1989, when he said: “Japan is sucking the blood out of us.” According to the CIA World Factbook, the U.S. achieved growth rates of 1.6, 2.6. and 2.4 percent over the past three years. Slow but steady, but they look positively dazzling compared to Japan’s GDP growth rates of 0.0, 0.5 and 0.5 percent during the same period.)

Very thoughtful post.

But what if there is a fifth option with the money: to buy foreign stocks to upgrade foreign plants and reduce the US economy when the US plants have less capital to stay competitive?

 

[ColonelAngus]

I’d like to only buy made in America electronics because no one is forcing me to buy foreign goods.

What Brands of made in America electronics should I purchase and where?

Thanks guys.

 

[Kondor3]

Yes. a trade surplus is better than a trade deficit.

Then again, I don't care about trade anywhere near as much as I care about the preservation of our democracy in the face of demagoguery.

 

[iceberg]

I hear on CNN & MSNBC stupid people saying that trade deficits don't matter. Maybe they are socialists in a capitalistic country, but here are a few reasons why they are wrong.
1. If I have a trade surplus, you are either giving me your money, or borrowing money to pay me.
2. If I have a trade deficit, I am borrowing money to pay someone to buy stuff.

Countries with trade surpluses can buy factories and properties in debtor countries, their currency is strong, their credit rating is strong, just the opposite for debtor countries.

IMHO it is much better to have a trade surplus than a trade deficit.

they know they got a turd for a platform and are trying to sell it however they can.

note to democrats - stop the TRUMP SUCKS platform. it ain't workin. you want me and others to not vote trump again, come back from the ledge and stop being freaking insane asswhipes cause you're not getting your way and develop a better plan for the country as a whole.

 

[Harpy Eagle]

I’d like to only buy made in America electronics because no one is forcing me to buy foreign goods.

What Brands of made in America electronics should I purchase and where?

Thanks guys.

Here ya go!

You are welcome!

Here are 100+ brands that are 100% made in the USA




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[iceberg]

I’d like to only buy made in America electronics because no one is forcing me to buy foreign goods.

What Brands of made in America electronics should I purchase and where?

Thanks guys.

Here ya go!

You are welcome!

Here are 100+ brands that are 100% made in the USA

Sent from my iPhone using USMessageBoard.com

thanks. i'll check out some brands to support.

 

[RealDave]

Having a trade deficit is not the same as losing money like the idiot Trump thinks.

 

[RealDave]

So, if I manufacture widgets & I import steel from China, those steel purchases add to the trade deficits with China. But I export over half my widgets to other countries. Something I could not do if I bought more expensive steel purchased from other counties. Trump puts on tariffs on imported steel thinking this will help US steel companies to compete but US steel companies just increased their prices. Net effect is our products are now more expensive. Making their export tougher.

The trade deficit hinges a lot on the strength of the US dollar . If the dollar is strong, imports are cheaper. Exports are more expensive. Trade deficits grow.

 

[iceberg]

Having a trade deficit is not the same as losing money like the idiot Trump thinks.

so i should ignore a billionaire on how money works and listen to a bitter idiot on a random newsgroup.

 

[jknowgood]

Are people forced to buy foreign goods ?

I get it if the other country is cheating , but just cause we buy more from X doesn’t mean it’s bad . Maybe they have a product we don’t .

By the way . We export a lot of shit .

"Are people forced to buy foreign goods?" Yes.

Next question.

Yes ? How so . You were forced to buy a Volkswagen?

I guess the same way russia made you vote for Trump.

 

[Harpy Eagle]

I’d like to only buy made in America electronics because no one is forcing me to buy foreign goods.

What Brands of made in America electronics should I purchase and where?

Thanks guys.

Here ya go!

You are welcome!

Here are 100+ brands that are 100% made in the USA

Sent from my iPhone using USMessageBoard.com

thanks. i'll check out some brands to support.

I will be honest, I could not care less where something was made. Best combination of quality and price is the determining factor for me.


Sent from my iPhone using USMessageBoard.com

 

[Harpy Eagle]

Are people forced to buy foreign goods ?

I get it if the other country is cheating , but just cause we buy more from X doesn’t mean it’s bad . Maybe they have a product we don’t .

By the way . We export a lot of shit .

"Are people forced to buy foreign goods?" Yes.

Next question.

Yes ? How so . You were forced to buy a Volkswagen?

I guess the same way russia made you vote for Trump.

Hell, now the faux-Cons are claiming Google made people vote for Hillary


Sent from my iPhone using USMessageBoard.com

 

[iceberg]

I’d like to only buy made in America electronics because no one is forcing me to buy foreign goods.

What Brands of made in America electronics should I purchase and where?

Thanks guys.

Here ya go!

You are welcome!

Here are 100+ brands that are 100% made in the USA

Sent from my iPhone using USMessageBoard.com

thanks. i'll check out some brands to support.

I will be honest, I could not care less where something was made. Best combination of quality and price is the determining factor for me.


Sent from my iPhone using USMessageBoard.com

yea, i *want* to support some of these places but the ones i have had time to check out are pretty pricey. a $65 polo i'm just not going to buy from *any* brand really. i'll keep digging, it is a good reference point.

 

[iceberg]

Are people forced to buy foreign goods ?

I get it if the other country is cheating , but just cause we buy more from X doesn’t mean it’s bad . Maybe they have a product we don’t .

By the way . We export a lot of shit .

"Are people forced to buy foreign goods?" Yes.

Next question.

Yes ? How so . You were forced to buy a Volkswagen?

I guess the same way russia made you vote for Trump.

Hell, now the faux-Cons are claiming Google made people vote for Hillary


Sent from my iPhone using USMessageBoard.com

only fair - the left has been claiming for months the $ spent on facebook political ads made hillary lose.

stupid is stupid and not confined to a singular party.

 

[blastoff]

I hear on CNN & MSNBC stupid people saying that trade deficits don't matter. Maybe they are socialists in a capitalistic country, but here are a few reasons why they are wrong.
1. If I have a trade surplus, you are either giving me your money, or borrowing money to pay me.
2. If I have a trade deficit, I am borrowing money to pay someone to buy stuff.

Countries with trade surpluses can buy factories and properties in debtor countries, their currency is strong, their credit rating is strong, just the opposite for debtor countries.

IMHO it is much better to have a trade surplus than a trade deficit.

You have a trade deficit with your local grocery store. Explain how that is a bad thing.

Apples and oranges.

We sell to other countries and buy from them. Other countries sell to us and buy from us. The question or aim is the balance of those sales and purchases.

I buy from a grocery store and have nothing to sell them. They sell to me and buy nothing from me.

 

[BuckToothMoron]

I hear on CNN & MSNBC stupid people saying that trade deficits don't matter. Maybe they are socialists in a capitalistic country, but here are a few reasons why they are wrong.
1. If I have a trade surplus, you are either giving me your money, or borrowing money to pay me.
2. If I have a trade deficit, I am borrowing money to pay someone to buy stuff.

Countries with trade surpluses can buy factories and properties in debtor countries, their currency is strong, their credit rating is strong, just the opposite for debtor countries.

IMHO it is much better to have a trade surplus than a trade deficit.

It’s not a question with one answer for all occasions. There are many factors to be considered...current economy, growth rate, population growth, etc.

Do you want debt on an asset which is depreciating or appreciating?

Its not the microeconomic effect on an asset, its the macroeconomic effect on the US economy that concerns me. As I said in subsequent posts: foreign steel dumping causes our steel plants to close, foreign governments subsidizing foreign cars hurts domestic car manufacturing, foreign governments stealing intellectual property hurts long term US employment, etc. Good paying jobs don't grow on trees, Trump is working to create more good paying US jobs.

My point is there is not a simple answer that holds for all circumstances. I think you are concocting an argument against trade deficits to bolster what Trump is doing, so your argument is based on politics not intellect.

Of course perhaps you know more about this than Milton Friedman. He disagrees with you and Trump-

Milton Friedman schools Donald Trump and others who suffer from 'upside-down' thinking on trade and protectionism - AEI


In the international trade area, the language is almost always about how we must export, and what’s really good is an industry that produces exports, and if we buy from abroad and import, that’s bad. But surely that’s upside-down. What we send abroad, we can’t eat, we can’t wear, we can’t use for our houses. The goods and services we send abroad, are goods and services not available to us. On the other hand, the goods and services we import, they provide us with TV sets we can watch, with automobiles we can drive, with all sorts of nice things for us to use.

The gain from foreign trade is what we import. What we export is a cost of getting those imports. And the proper objective for a nation as Adam Smith put it, is to arrange things so that we get as large a volume of imports as possible, for as small a volume of exports as possible.

This carries over to the terminology we use. When people talk about a favorable balance of trade, what is that term taken to mean? It’s taken to mean that we export more than we import. But from the point of our well-being, that’s an unfavorable balance. That means we’re sending out more goods and getting fewer in. Each of you in your private household would know better than that. You don’t regard it as a favorable balance, when you have to send out more goods to get fewer coming in. It’s favorable when you can get more by sending out less.

Following that discussion, Friedman next discusses

 

[BuckToothMoron]

Yes. a trade surplus is better than a trade deficit.

Then again, I don't care about trade anywhere near as much as I care about the preservation of our democracy in the face of demagoguery.

How in the hell is shipping out more than you ship in better? It’s utter nonsense. The US is in a very unique and desirable position- we have the largest economy and the reserve currency. Trade deficits come back to this country as investment. This type of thinking is the result of being a Republican instead of a conservative. Too bad for you.

 

[RealDave]

Having a trade deficit is not the same as losing money like the idiot Trump thinks.

so i should ignore a billionaire on how money works and listen to a bitter idiot on a random newsgroup.

You should ignore Trump because is is dumber than shit.

What is your "trade deficit" with the local grocery. Do you think buying food is losing money?

The idea you think Trump is smart just makes me laugh.

 

[BuckToothMoron]

I hear on CNN & MSNBC stupid people saying that trade deficits don't matter. Maybe they are socialists in a capitalistic country, but here are a few reasons why they are wrong.
1. If I have a trade surplus, you are either giving me your money, or borrowing money to pay me.
2. If I have a trade deficit, I am borrowing money to pay someone to buy stuff.

Countries with trade surpluses can buy factories and properties in debtor countries, their currency is strong, their credit rating is strong, just the opposite for debtor countries.

IMHO it is much better to have a trade surplus than a trade deficit.

I just re-read your OP. You literally said that you have to borrow money whether you have a trade surplus or deficit.