They have a funny way of showing it, Mr. Ross. They send us goods and their capital [ Mathematically, trade flows are balanced by investment flows. The bigger the trade deficit, the more capital flowing into the U.S. Chinese and other foreign investors prefer to trade their goods for America’s equity and debt. America is seen as the safest, surest investment bet in the world. That’s bad news? ]
Of course this pesky little capital flow issue is something that you either cannot grasp (and here's another example of your failure to grasp) or it's something you refuse to acknowledge ( here's you again, dodging the direct question).
They are exhibiting a classical communist mindset and patience. Which to a short-term U.S. analyst is mysterious and inexplicable. China apologists on this end don't comprehend economic warfare by communist states.
Nor truth be told do they comprehend how dangerous the outsourcing is. It is an alien subject for most traders to begin to grasp. Industry...of all types..."naturally" flows to them...due to the unnaturally low wage conditions they artificially maintain. That is the whole point.
They send us goods and their capital.
They only send us goods to capture still more industry...and shut down ours.
And for the most part they are not investing capital in the U.S. They are buying debt. Which merely props up the profoundly unproductive U.S. federal spending sector. I.e., they aren't spending to help build U.S. "muscle"...they are encouraging the glutton to get fatter...or the drunk to keep drinking.
I know this is really hard for you to understand, Joe, but this is really pretty important because you so BADLY MISAPPREHEND the nature of the capital flows. They are buying DEBT. Let me repeat that: They are buying debt. The money is not a "gift" or a product purchase. The Money they are lending us, the principal has to be paid BACK. With Interest. And the only reason they have been buying our debt is that it furthers their idea of trade war. And it works. It helps them keep the dollar up...temporarily... until they decide they have gotten enough of our industrial advantage relocated to their control. And then the 'wedge' of obligations hits the fan and the matured T-Bills have to be repaid.
They only need to keep the dollar up temporarily until they have successfully finished strip mining the U.S. of its core industrial capabilities. For them, decades are routine benchmarks. For you, Joe, they are an Eternity. You are doomed to short-term thinking. You would likely wise up...only when the dollar has actually collapsed. But you likely will still refuse to acknowledge that you were an enabler of the Communist plan...or that you helped set up the U.S. for the fall.
And, LOL!, I appreciate you reposting the threads where in you completely failed to acknowledge the truth that your own source Mankiw disputes your capital theory!
I see you have no other data. You are going off of theory. Fortunately for the conservative case...Mankiw's power point display is a set of axiomatic claims that does not support your positions...and apparent misinterpretations. Net 'capital inflows' doesn't mean what you think they mean. They are a liability. A debt. Which is why the continued U.S. import habit is representing a net reduction of U.S. savings and wealth.Review Figure 2 in Images 19 and 20. Unfortunately the power point files were not accessible for posting here...but clearly they show that in fact the U.S. has been suffering a serious negative number in NX, net exports which drives all other issues. As Manciw's charts confirm the conservative case...that national savings "S" is diving as a result of the increasing trade deficit (S=I+NX), with corresponding declines in both Domestic Investment and capital savings.
Conclusion: You got it precisely backwards. Net Trade Imports don't increase our capital. Or our well-being. They are a capital liability. Hence They reduce it and our savings of it. GDP is also confirmed to be directly reduced by a trade deficit. Y=C+I+G+NX Translated: GDP = Consumption + Domestic Investment + Governmental Spending + Net Exports. In these equations, a negative number for NX, the net exports, lowers GDP 1 for 1.