Free Republic
Browse · Search
News/Activism
Topics · Post Article

To: snowsislander

What is does a "trade deficit" mean to an economy that has been growing, in most years, and growing between 3% and 4% in the past few years? It means the domestic economy can afford to buy more, in goods and services, than it exports, in good and services, because it's internal strengths are still allowing it to internalize the difference with higher productivity, among other things.

Trade deficits, international monetary exchange and international monetary flows work together, not independently and if they were not working, and balancing the international exchange (which is what is really important) then the adjustments would come in the form of changes in monetary values. What would those changes mean for the US? A lower dollar; which would mean what? We'd be able export more (our manufactured goods become cheaper) and import less. While somewhere, the "trade" balance would go in a different direction for some other countries, but between international trade and international monetary exchanges, the system continually balances things out.

"Trade deificit" is a chimera, as far as problems in a growing economy.


64 posted on 05/15/2005 8:38:58 AM PDT by Wuli (The democratic basis of the constitution is "we the people" not "we the court".)
[ Post Reply | Private Reply | To 10 | View Replies ]


To: Wuli
"Trade deificit" is a chimera, as far as problems in a growing economy.

That is exactly right. I believe the left is trying to find something negative about the economy, now that we clearly aren't in recession. And people view trade deficit as a negative thing, so they push it. What matters is our gdp growth per capita, and unemployment rates. Both of which are very healthy.

77 posted on 05/15/2005 1:23:19 PM PDT by ran15
[ Post Reply | Private Reply | To 64 | View Replies ]

Free Republic
Browse · Search
News/Activism
Topics · Post Article


FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson