[blueberry12]

"We're by far the richest nation on earth. Doesn't it stand to reason that the nation with the most money will have the most to spend?" Yes, but a growing trade deficit means that US dollar is going overseas and foreign products are coming in. So, money is going out of the US which means we have less and less money to spend. Am I wrong? "Every international transaction that Americans engage in will, by definition, leave both parties to the transaction believing they are better off than before - otherwise the transaction would not occur. By this measure, the "balance of trade" is always positive, benefiting the nation as a whole." Yes, but trading does not mean that in the end both parties will profit. Both parties may be better off RIGHT NOW; but as time passes, they find out who had a better deal. If it were true that both parties profit from trading, then nobody would lose money on Wall Street, for example, because both parties (sellers and buyers) would end up with a profit. That sounds impossible...

[CharlesWayneCT]

But if there is an imbalance, obviously we came out on top. After all, we got actual goods and services, while the other guys got dollars.

Either dollars will remain strong, in which case everybody wins, or dollars will drop, in which case we still have all the great stuff we bought, and the other nations are stuck with a lot of worthless paper.

I realise that if the dollar drops like that, THEN we will be unable to buy as much from foreign sources -- and if that happens maybe we will have some domestic production start up, for a lot of what we buy it isn't hard.

Of course, if things get real expensive then we will buy less foreign stuff, it might slow down the economy, unemployment will rise, which will just make it harder to buy, which will mean dollars NOT going overseas.

But the thought that we have to find some goods we can sell others in order to come out ahead just doesn't make sense.

Any more than it makes sense to consider the trade deficit of Delaware vs the other states. Oh, you didn't know that Delaware had a massive trade deficit? Well, I don't know either, so far as I can tell nobody keeps that data (or nobody publishes it). I have to think that is because we realise it doesn't matter.

But why doesn't it matter from state to state, if it matters from country to country?