The Oldest Fallacy in Economics: Donald Trump and Bernie Sanders have fallen for it

Money leaving the country for trade goods removes currency locally...

That's the comic book version people like to believe, where U.S. dollars are piled on to big steamships bound for China to buy cheap knock-offs. As the years go by nobody in the U.S. has any dollars left any more and the Chinese are just swimming in dollars --like some oriental Uncle Scrooge.

Back on the Planet Earth in real life we understand that the Chinese don't go shopping in China using dollars. They have their own currency and it's called the Yuan. In real life when we buy say, Chinese gold (they mine more gold than anyone) we can pay in dollars if we want but they have to turn right around and use the dollars to buy American stuff. It's either that or we first sell them U.S. made stuff for Yuan first for Yuan before we can buy the gold.

There is never a payments deficit.

OK, sometimes there may be say, a goods trade deficit where we trade American goods for Chinese services. The times we read about a so-called "trade deficit" is when we got a deficit in goods'n'services that was covered by a surplus in other stuff. Example: a few years ago I made a small fortune when I sold my in Baidu stock to some guy in China. He paid me money that I traded to buy Chinese gold and sold it to you so you could hoard it. That's what a 'trade deficit is in real life --I end up w/ lots of dollars and you end up with a big pile of gold.

What's not to like?

Trump has said repeatedly now that he’s a free trader—but that a country just needs to be smart about it.

And he’s right about that.

And he's not the first, of course. Many others have said it: Free Trade, yes, but Fair Trade too.

Free Trade, yes, but Fair Trade too.

--and we're all in favor of motherhood & apple pie too, but personally whenever I buy something I'd rather not have to put up w/ some bureaucrat crying NO-FAIR NO-FAIR. I worked hard to create my wealth and if it's OK w/ y'all I'd really like to keep it and use it as I see fit.

Tariff of 1789

Silly myth made out of concrete.......

"Whereas it is necessary for that support of government, for the discharge of the debts of the United States, and the encouragement and protection of manufactures, that duties be laid on goods, wares and merchandise:"[1]

Tariff of 1789

Welcome to the convo Cent, let me help you get up to speed on what we're talking about.

Sgt_Schultze was talking about a "tariff as a government financing system and it served". I pointed out that the system that founding fathers were working to go into was a move from stupid tariffs toward freedom. What we got is that in 1792 average tariffs were 15% and total revenue was about $4 million. Now the rate's only just over one percent but import tax revenue's at $25,298 million. Yeah I know this is where y'all say that we can't compare 1790 to now because they're totally different but if you guys are tooting a return to the good ol' days then we need to keep our eyes wide open.

The point is that lower rates mean more revenue and more freedom; Reagan tried to explain it decades ago. Extreme leftist like Obama and his union thugs don't give a rat's patootie about America and the deficit, they just want "fairness", meaning they just want to stick it to any Americans trying to be free.

Re: Patriotism would keep it from happening except that the globalists aren’t loyal to the US.

They never have been. They see themselves as sophisticated citizens of the world for whom patriotism and national security are mere interferences in the unimpeded flow of goods, natural persons, and capital - for the benefit of global finance and corporate.

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