To: Willie Green
Interesting quotes, but beside the point. You said the trade deficit is a debt we have to pay, and you justified it with the example of foreigners buying US treasuries. If, as you acknowledge, trade deficits don't cause budget deficits, then the debt I pay in my taxes is caused by the fed spending more than it takes in; it isn't related to the trade deficit.
45 posted on
04/02/2004 5:03:36 PM PST by
xlib
To: xlib
If, as you acknowledge, trade deficits don't cause budget deficits, then the debt I pay in my taxes is caused by the fed spending more than it takes in;And a Trade Deficit is essentially the same principle: we import more than we exchange in return.
We pay with money (paper or electronic) that has no intrinsic value of its own.
Our money is actually promisory notes, IOUs, DEBT.
And we are obligated to redeem that debt that is being built up by the Trade Deficit.
To: xlib
Willie thinks that a nation that exports (sells) more than what it imports (buys) is in better economical shape than the reverse.
In Willie's world then, China is more prosperous than the US.
There comes a point when you can personally buy more than what you can personally produce, then there is a personal trade deficit.
When I was younger, my financial situation required that I bought things I needed on credit, because I lacked cash flow. I lacked cash flow because my income was low, and my net worth in the dirt.
I grew older, advanced, saved, invested, and grew economically.
Now, I continue to use credit, but as a convenience, and in some instances to gain financial advantage.
I can also purchase more goods than those that I can produce.
I have elevated my financial status to a point where I live in a constant trade deficit.
Is that a bad thing?
Of course not.
It isn't a bad thing for the US either.
59 posted on
04/02/2004 5:42:31 PM PST by
Luis Gonzalez
(Sin Pátria, pero sin amo.)
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson