Posted on 03/31/2016 4:13:59 AM PDT by expat_panama
Every purchase we make is trade. We trade to improve our lives and trade occurs only when both parties benefit from the transaction. Individuals and companies engage in trade; countries do not trade, as countries are just geographic areas with political boundaries.
The term “Trade Deficit” causes a lot of confusion and implies that one country is in debt to another country. This is not the case.
The “Trade Deficit (or Surplus)” used to be called “The Balance of Trade.” I do not know when or why the name was changed, but one possibility is that “trade deficit” sounds more ominous and gives the government a chance to address a problem that doesn’t exist...
...our employer has a huge trade deficit with you; that is, your employer buys all of your work, but sells you little or nothing. You probably have a trade deficit with your grocer; you purchase from the grocer, but your grocer has no need for your programming skills and does not purchase anything from you.
Similarly, the people of Massachusetts have a trade deficit with the people of Florida...
...trade keeps the customer the king.
One reason the reported trade deficit keeps growing is that foreign entities use those dollars to bankroll the National Debt/Annual Deficit rather than purchasing goods and services. When the government runs a deficit, the government has three choices: increase taxes, print money, or borrow money. The first is out of the question. The second can be used for a short period, but eventually the taxpayer feels the pain of price inflation. The third is the easiest option, especially when there are eager lenders. Maybe reducing the size of the federal government and its need to borrow would lead to “balanced” trade.
(Excerpt) Read more at americanthinker.com ...
bert = ignore
you don’t understand the situation at all.
trade is not sovereign. America doesn’t buy stuff from China and America doesn’t sell stuff to China. People and companies do the buying and the selling. That would be American people and companies and Chinese people and companies. (and all the world’s people and companies for that matter)
To try to insert taxes you paid to the US Government as a meaningful factor of the money equation is a big mistake. Your taxes or government benefits have no bearing on the US China balance of trade that results from the inter action of non government entities...... ie people and companies.
Why so? It’s merely what Milton Friedman, Thomas Sowell etc. would say, and free market principles.
I understand the situation far more than you do! I was in the business!
Consumers “buy stuff” when they feel they “have money”. Americans “have money” in large part because the US government injects about $1T of funny money into the economy every year. Then everyonne shouts “Whoo hoo!” and goes shopping for cheap stuff from China.
The trade deficit is directly tied to monetary policcy.
the operative word there is was. Was indicates you might not really have understood what you thought you understood
I not only was but am
or not
You see NO benefit from trade with China? I believe you are sadly mistaken. We voluntarily buy myriads of products from China, at prices far below what we could make it here. The consumer benefits. We still pay taxes on these goods whether created here or not, and China could just as easily sell their goods to other countries which they certainly do. There is a great benefit to our country, whether you see it or not. Or should I say whether you BELIEVE it or not. I suggest reading some Thomas Sowell, Basic Economics.
And just as an FYI, an analogy, like the one you are complaining about, need not be perfect to make it’s point. He could have just as easily used countries to make it.
Uh, no.
Another factor completely ignored is the potential for investment. The trade deficit results in dollars flowing out of this country. But those abroad holding these dollars need a place to put them. So they invest in American securities, banks, etc. The key here is to attract those dollars. And the best way to do that is to remove the detrimental barriers that prevent foreign investors from bringing those dollars in.
I retired over ten years ago. WAS applies!
It shows the historical "Trade Deficits" for the United States.
Take a look at the last line for 2015. It shows the following:
Total U.S. Exports: $2.22 Trillion
Total U.S. Imports: $2.76 Trillion
Total U.S. Trade Deficit: $540 Billion
For Reference the Total U.S. GDP is about $18 Trillion
So we are exporting over 10 percent of our GDP. I would assume that means about 10% of our jobs are directly involved in creating goods and services that we sell overseas. If we reduce those exports then jobs in these sectors will be lost.
Trump tells us that he is going to reduce that $540 billion by increasing tariffs. Is there any doubt that the countries we trade with will add tariffs of their own? If they do then those $2.22 Trillion in exports and the associated jobs are going to decline. That seems obvious to me.
What will also decline is our total imports. Fewer cheap HDTVs and Chinese made cars and such. People involved in selling that cheap stuff will lose their jobs as well.
What will get better? Donald gets to choose that. Anything that gets protected from competition from the Chinese and others will benefit. Will employment go up as a result enough to cover the jobs lost? I really doubt it. But if anyone has data that will show that tariffs will increase employment they should point it out to all of us. It would be interesting reading.
So like Trump, you also embrace Bernie Sanders' trade policy?
Trade isn't a left or right issue. It is an an American issue, you are either a gloBULList traitor or you are for America. No middle ground.
Last time we tried something like that, it kept us in a Depression for over a decade. Those who ignore history are doomed to repeat it.
Then there are those that are neither but just have no personal knowledge of the theories they bandy about
That is not middle ground but groundless
This isn’t a nationalist issue. It is an economic one. Free trade generates more economic activity for everyone. Reject it at your own peril.
You’re saying we need to keep buying imports, because we made a mistake in the 1930’s?
How is it we benefit, from sending all our money to a massive communist nations, which doesn’t even trade freely with us?
China can buy American companies.
Can America buy Chinese companies?
Very well stated. Thanks.
It makes NO sense to outlaw or to compel a manufacturing process in the US and to expect those US companies to remain competitive with foreign manufacturers. Much of the manufacturing savings realized by overseas production is achieved by direct US government distortion of the local manufacturing climate. Tariffs help to rightly balance US trade policy with our generous regulation behavior. What we have today is neither free trade nor fair trade.
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