Hmmm...
Hmmm...
Agreed. Let's put this archaic concept on the old ash-heap right next to mercatilism and protectionism.
There's a more recent Federal Reserve study that found the same thing. Another thing not mentioned is the article, is the affect on the price of all that oil we import.
Should have put Walmart is Evil in the title. That way everybody would read this very good article.
At some point you have to make something that someone wants to buy. Really. You can try to justify trade deficits and deficit spending all you want, but they are really bad things.
Straw man alert.
What the author above fails to understand (being generous and not presuming that he deliberately ignored facts) is that the Dollar isn't fairly valued.
That's the fundamental flaw of the crowd that is criticizing the current fall of the Dollar...that the Dollar was fairly valued in the past.
It wasn't.
For decades, the U.S. Dollar has been artificially propped up by foreign governments and central banks. The U.S. has even *cooperated* with such behavior by coordinating currency interventions.
...
Now fast forward to today: all in the world that the U.S. is doing now is simply *not* intervening in the currency markets to aid Asia and Europe in keeping the Dollar propped up.
That's it. We're simply not continuing our old behavior of intervening in the currency markets to keep the Dollar overvalued.
In the absence of U.S. market intervention, Asia and Europe are left to hold up the Dollar on their own...and they simply don't have economies large enough to maintain that trick forever.
They want to keep the Dollar propped up, but they can only hoard U.S. Dollars for so long, and the more that the Dollar falls, the worse position those foreign governments are in (with regard to keeping the Dollar propped up). As the Dollar falls further, it becomes even *more* difficult for them to push it back up.
...And the more that the Dollar falls, the more expensive their exports to the U.S. become, making them less competitive.
Eventually, the Free Market will prevail and the U.S. Dollar will be fairly valued again (after a substantial fall from its earlier heights). At that point, the trade deficit will reflect a Free Market balance.
We're not quite there yet, however. The Dollar still isn't fairly valued. For one thing, the Chinese Yuan to Dollar peg has to be broken first.
But even when the Dollar falls to that Free Market valuation, it still won't be "cheap."
We're not talking about Argentina or Wiemar Germany here; we're merely talking about the Dollar finally becoming fairly valued again - instead of maintained at orbital altitudes.
"Boaz noted that he ran up trade deficits with his grocer, dentist, and department store, all of which bought nothing from him. On the other hand, Boaz had a trade surplus with his employer, along with the publisher of his book."
First sentence means that he bought items without paying for them (on credit). So that everyday he doesn't pay interest on these goods and services increase dramatically. Then these bills are handed over to the collection agency who hounds the poop out of him causing him stress and emotional turmoil until he goes to a doctor who prescribes high-cost medicine and those bills are eventually turned over to the collection agency too, causing further stress and emotional anxiety until he keels over with a heart attack. The trade surplus with his employer doesn't exist because if he doesn't work because of stress and anxiety, he doesn't get paid. When the man dies, the big loser is the publisher who advanced the cash and will receive not one iota on a book that will never be written.
Weird how that trade surplus and deficit works.
We have trade deficits. The sky is falling. The sky is falling. The sky is falling. The sky is falling. The sky is falling. The sky is falling. The sky is falling. The sky is falling. The sky is falling. The sky is falling.
thank you. the sky is not falling, after all.
How we end up with deficits or surpluses matters a lot more than the mere notion of one or the other.
They get our money, but we get their stuff.