[Willie Green]

TRADE DEFICIT: Formally termed a balance of trade deficit, a condition in which a nation's imports are greater than exports. In other words, a country is buying more stuff for foreigners than foreigners are buying from domestic producers. A trade deficit is usually thought to be bad for a country. For this reason, some countries seek to reduce their trade deficit by--

1. establishing trade barriers on imports,
   
2. reducing the exchange rate (termed devaluation) such that exports are less expensive and imports more expensive, or
   
3. invading foreign countries with sizable armies.

[Willie Green]

ping

[AmusedBystander]

invading foreign countries with sizable armies.

Patience my friend. One day when we are really into them, we'll attack. Or maybe not.

[lonestar67]

more good economic news masquerading as bad news.

I hope the deficit goes higher.

[PMCarey]

From Basic Economics by Thomas Sowell:

The basic facts about international trade are not difficult to understand. What is difficult to untangle are all the misconceptions and jargon which so often clutter up the discussion ...

For example, the terminology used to describe an export surplus as a "favorable" balance of trade and an import surplus as an "unfavorable" balance of trade goes back for centuries. At one time, it was widely believed that an import surplus improverished a nation because the difference between imports and exports had to be paidin gold, and the loss of gold was seen as a loss of national wealth. However, as early as 1776, Adam Smith's classic, The Wealth of Nations argued that the real wealth of a nation consists of its good and services, not in its gold supply. Too many people have yet to grasp this, even in the 21st century.

If the goods and services available to the American people are greater as a result of international trade, then Americans are wealthier, not poorer, regardless of trade. As for gold, India had the world's largest supply of gold in 2003, but no one considered it the world's richest nation. Indeed it is one of the poorest.

Incidentally, during the Great Depression of the 1930's, the United States had an export surpluse - a "favorable" balance of trade - in every year of that disasterous decade ...

[untrained skeptic]

"WASHINGTON - The U.S. trade deficit unexpectedly rose to an all-time high in October as oil shipments soared and the United States set deficit records with China, Europe, Canada and Mexico."

Anyone who calls an October increase in the dollar value of the trade defecit "unexpected" is a liar or a complete fool.

When do these morons think retailers are buying the goods they sell during the Christmas season?

A trade deficit is in general not something you want to have. We'd rather be having other people buy things from us. However, since we're by far the richest country on earth we're going to have a trade deficit.

The size of the trade deficit is a problem. It's a serious problem. However when the article starts off with an comment as stupid as an increase in the trade deficit in October being "unexpected", there's not likely much by the way of sueful or credible commentary to follow.

[dennisw]

Empire of Debt : The Rise Of An Epic Financial Crisis

http://www.amazon.com/gp/product/0471739022/103-4631330-3191040?v=glance&n=283155

http://www.dailyreckoning.com/Sub/DRenergy.html

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[untrained skeptic]

For this reason, some countries seek to reduce their trade deficit by--

1. establishing trade barriers on imports,

That's a reasonable solution when other countries are dumbing goods on our markets and putting American workers out of work on a large scale.

There's likely some justification for tarrifs in some small markets, but we're sitting at 5% unemployemnt even with a huge number of illegal aliens working in the country.

If we apply tarrifs to products, who is going to manufacture them in the US? Are we going to import more labor from Mexico to make the products? Are we just going to raise prices and subsidize the income of a small group of people who benefit from those tarrifs at the cost to consumers buying those products?

2. reducing the exchange rate (termed devaluation) such that exports are less expensive and imports more expensive, or

Devaluing your currency is self imposed inflation. In China, where the government chooses what they think is good for the country, they can do that. Do it here and devalue people's life savings, and those politicians will be looking for new jobs, and likely facing insider trading charges because I don't suspect they would allow their life savings to be devalued in the process.

3. invading foreign countries with sizable armies. Invading countries because they can produce things cheaper than you can is called Imperialism.

[Bogie]

China lets it's currency float, or trade has to be changed in an artificial way by the industrialized nations of the world.

[EGPWS]

establishing trade barriers on imports,

Raise prices domestically

reducing the exchange rate (termed devaluation) such that exports are less expensive and imports more expensive,

Stifle our economy as the greatest in the world.

or invading foreign countries with sizable armies.

Whatever it takes to support a sovereign nation with the greatest economy, brightest future, and toting innovation envious of the rest of the world.