Poor Paul is from the anti-Lake Woebegone, where all the kids are below average. In his case, at least two standard deviations below average.
I never said that. You said it. You own it. LOL!
...when former CEA Chairman N. Gregory Mankiw's powerpoint clearly demonstrates how net exports are exactly equal to net capital outlfow (as is the case in China with us)...
Clearly you continue to misunderstand what Mankiw's ppt details. In fact, he is showing that GDP=C+I+G+NX.
So when Net Exports goes negative...GDP goes down. And that isn't the only thing.
So, Joe, if you subscribe to the theory that Net Capital Outflow = Net Exports , NCO=NX.... then you have to also accept Mankiw's claim that National Savings "S" = I + NCO (where I = Domestic Investment). Which means national savings "S" must also go down when NX (presumed equal to NCO) turns negative. There is no "requirement" either (as you previously opined) that "I" has to increase to balance the negative number.
Here is where I think you ran off the rails. Manckiw nowhere claims his equations have to maintain a static balance to maintain either savings or GDP. So a decline in savings results when NCO is reversed. Ergo, a trade imbalance is definitionally a dissavings... E.g., in plainer english... the country running a trade deficit loses national savings.
Capital inflow (Negative NCO) is not savings. In fact, it reduces it, and weakens our country. Your key misunderstanding and confusion.
I spotted your intellectual mistake a while back...you confuse net wealth for capital. It is not. Mankiw makes clear his position that it is merely additive to it...and in the case of a trade deficit, (negative NX) his equation, if prescriptive, means a Negative NCO...which subtracts from national savings...net wealth.
To try and further clarify Mankiw's equations, I would note that they are descriptive, not prescriptive. E.g., in the case of a negative NX, Capital inflow is not in fact, mandatory. It is, however, what is necessary for a balance to occur in the equation...but it doesn't have to be staticly balanced. It is a fluid, dynamic set of relationships...where any one variable is deformable...or discretionary. China, for example, doesn't have to buy our T-Bills...or any other debt instruments...nor do they have to buy any other assets of the U.S. All while merrily continuing to engage in a unilateral trade surplus against the U.S. [ Which according to Mankiw's equations directly increases their GDP, and Savings].
You previously evaded coming to grips with my posts and never responded to my earlier discovery that Mankiw explicitly observed in Image 19 and 20 that U.S. Domestic investment and national savings are collapsing with the trade deficit.
Explain those away. Your understanding of Mankiw's ppt was only partial...
And you have proved you don't know what you don't know. And that you are unwilling to learn.