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Free-traders are too stupid to realize they had a valid argument about OIL. They never brought OIL up. HAHA, too late, morons. 
Reagan temporarily saved us from the free-traitors. 
Posted on 11/29/2007 7:11:00 PM PST by LowCountryJoe
Pat Buchanan's recent attempt to diagnose the sinking dollar demonstrates that ignorance of basic economics is not limited to the Left. Buchanan points out the plummeting value of the dollar relative to other currencies and major commodities such as gold (up 24% this year) and oil (up over 50% in 12 months). He then declares that "the prime suspect in the death of the dollar is the massive trade deficits America has run up" to "maintain her standard of living and to sustain the American Imperium." This diagnosis offers a tantalizing glimpse of the truth, yet shatters it with protectionist bromides.
First, let's deflate the protectionist rhetoric. What are trade deficits and surpluses?
A trade deficit means that in sum, American dollars are going abroad in exchange for foreign goods. Consider what this means. If foreigners never cashed in those dollars, Americans would essentially be getting foreign goods free of charge. Protectionists like Buchanan condemn this as "borrowing," but this is actually a form of investment — both in US industry and in US dollars. Foreigners have been investing in the United States for decades for two primary reasons: the superior returns due to the growth potential of American capitalism, and the dominance and (relative) stability of the US dollar, which made them useful as a means of exchange apart from their purchasing power of US goods. Americans are not living "beyond our means," as Buchanan claims; we are simply a more profitable investment, with a more stable currency, than the foreign investors' own countries.
A trade surplus on the other hand, means that in sum, US goods are being sent abroad in exchange for foreign currency. A trade surplus is a form of investing in other countries, since (fiat) foreign currency is only worth the foreign capital it can purchase. This happened after World War II, when the United States sent capital to shattered foreign economies and reaped returns as the value of their economies — and thus their currencies — grew.
So are trade deficits preferable to trade surpluses? In a narrow sense, yes. A nation that has strong economic prospects will attract foreign investment and therefore experience trade deficits. Conversely, when the domestic economy is stifled by regulations and monetary manipulations, investors will send their savings abroad and their country will run a trade surplus. (This explains why the US deficit has consistently fallen during recessions and grown during periods of expansion.) However, the broader lesson is that trade inequalities indicate the net flow of foreign investment, and the benefit of the inequality is ultimately validated by the profitability of those investments. Profitable foreign investment results in GDP growth and positive currency valuations, whereas unprofitable foreign investment erodes economic growth and devalues the currency of the investment's recipient. Could a sufficiently large and wasteful investment be responsible for the current dollar crisis?
A large part of the US trade deficit comes from the bonds (treasury securities) the US government has been selling to foreigners to finance the growing federal budget deficit. The value of these bonds depends on both the strength of the US economy and the loss of value caused by expansion of the money supply. When the US Treasury sells bonds to individuals, it diverts savings from private investments; this diversion is a form of taxation. When it sells bonds to the Federal Reserve, it exchanges bonds for newly created dollars, which is a form of monetary expansion (inflation). Additionally, when the government sells debt to foreigners, it creates a liability against the US economy. Foreigners buying deficit debt are in essence betting on the ability of the government to provide a return on the investment in the form of positive economic growth. What happens when the investment fails to turn a profit?
The primary reason for the $9 trillion federal deficit is the so-called "War on Terror," including the spending on Homeland Security, Afghanistan, and Iraq. Unless you believe these funds averted an economic meltdown due to terrorism, these funds represent a near-total loss. Tanks, bombs, and bureaucratic paper pushers consume vast funds, yet they contribute nothing to the economy, aside from benefiting military contractors. This economic destruction is one of the biggest reasons for the declining dollar. (Perhaps the major reason is the credit bubble created by the inflationary policy of the Fed since the early 2000s, which is now collapsing and making the economy less attractive as an investment target.)
The falling dollar will make it increasingly expensive for the US government to accumulate more debt. Eventually, it will be forced to either cut spending, explicitly shift costs to US citizens by increasing taxes directly, or (most likely) increase taxes through higher inflation. Investors have already anticipated this and flocked to other currencies and to gold as a refuge. The slide will likely continue until some kind of budget reconciliation is evident.
The overwhelming response to the problems created by the government's financial irresponsibility has been to call for more protectionism, as Mr. Buchanan is doing. Because it creates barriers to trade and investment, protectionism makes the US dollar less valuable to both foreign consumers and investors, thus accelerating the fall of the dollar. Investors have certainly anticipated this as well — but don't blame them for betting on the gullibility of Americans to the protectionist rhetoric of economic ignoramuses like Paul Krugman and Pat Buchanan.
If we can avoid the protectionist trap and reconcile the budget, the falling value of the dollar will eventually attract investors and stimulate exports. As the developing world becomes richer and freer, the US dollar is unlikely to enjoy the unchallenged superiority it once had, but maturing foreign markets will attract products and services designed in America, and we will once again become a recipient of foreign investment. Free markets and American ingenuity made the United States the greatest economy in the world. They are the only way we will keep it that way.
Thank you for illustrating my point RE: my post 417, In fact you'll prolly have the other F/T's accusing you of being a closet patriot for throwing me this softball.
Those fine and noble sons of the South went into the field of battle to deal with those 'Yankees' equipped with a hodgepodge of small arms and limited ammunition.
Why?
Because nobody - or few in the South recognized that having an industrial base is critical if you are serious about winning a war.
Plus the fact the powers that be in the South allowed their currency to become a joke!
If their money had of been worth a "plugged nickle", those blockade runners would have got through.
One of the greatest differences between a free-marketeer and a protectionist with regard to national security (using your earlier and never completed example of a bullet factory) is that a free-marketeer wants to make it easier to build bullet factories in the U.S., while a protectionist thinks that slapping a tariff on plastic lawn furniture will do the trick.
Well thanks for the history lesson even though it had nothing to do with your point about the Red Chinese “bastards”.
The difference is that you can pay a $20/hour employee for 30 minutes of labor to assemble the parts, or pay a $0.50/hour employee for 30 minutes of labor. That’s a $9.75 difference in cost.
There’s a reason Eminence sources parts from China, and not only has a factory in the US but in China, too - price. The quality is the same; the price is different.
Where the US leads and excels is in research, innovation, and engineering. Invention.
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Well well well. This is what the “Patekonouses” have been saying the whole time while the free-traders have lied through their teeth and doomed their souls to hellfire.
The only reason you crackers are making a profit off cheap foreign labor is because it is cheap labor. You do not deny that the only reason you crackers are making a profit off cheap labor is cheap labor. The Chinese aren’t superior speaker makers, the Chinese aren’t more efficient in trade, the only reason you employ Chinese is because they are your new negros doing all the heavy lifting.
Ah your reasoning. Let the inferior races of the world like the negros and yellows do all the heavy lifting and pounding dirt, so us superior WHITES can do the fine manufacturing, something to match our intellect. After all that is what God made the races for.
Where have I heard this argument before?
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An Excerpt from “Slavery in the Light of Social Ethics,” by Chancelor Harper, printed in Cotton is King, and Pro-Slavry Arguments: Comprising the Writings of Hammond, Harper, Christy, Stringfellow, Hodge, Bledsoe, and Cartwright, on This Important Subject, E.N. Elliott, ed. (Augusta, GA: Pritchard, Abbott & Loomis, 1860):
Our slavery has not only given existence to millions of slaves within our own territories, it has given the means of subsistence, and therefore, existence, to millions of freemen in our confederate States; enabling them to send forth their swarms to overspread the plains and forests of the West, and appear as the harbingers of civilization. The products of the industry of those States are in general similar to those of the civilized world, and are little demanded in their markets. By exchanging them for ours, which are everywhere sought for, the people of these States are enabled to acquire all the products of art and industry, all that contributes to convenience or luxury, or gratifies the taste of the intellect, which the rest of the world can supply.
You have completely missed the point, which is this: there are certain products manufactured overseas for a much lower cost than what it could be manufactured here. Why? Because US citizens have so many opportunities for decent paying jobs that they are unwilling to work in lousy manufacturing environments for wages that would allow certain products to be competitively manufactured on US soil.
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Uh no. Your looking for slaves to pick your cotton, and American’s are unwilling to do it for 20 cents an hour.
So you go overseas to find your new negros to pick your cotton, and end up not only picking cotton but your new negros are building car parts, putting American auto workers out of business.
See this is originally why there were slave codes, to keep blacks from doing the jobs whites should be doing. No reading, no writing, no blacksmithing, no clockmaking, no putting whitey out of the job....
You should have obeyed the slave codes, now you broke the law. Shame shame shame.
WAL-MART doesn’t pay tariffs?
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Walmart doesn’t make its profit off the backs of foreign slaves, like you do.
Are these the kinds of jobs you wish we had more of, that more tariffs would “protect?” I’d prefer we continued to educate our workforce to the point where I could find qualified candidates to work in my office for a minimum of $40K per year. The fact is, I can’t find people to fill open positions because they just aren’t out there, and the ones that are want too much money because of the tight job market.
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Oh boo hoo, a single tear rolls down my cheek. The slaver can’t find employees.
Continued growth of our economy is the only thing that will raise their standard of living
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You Libertarians lie when you say you want to secure the borders, if it were up to you, you would import 5 million cheap labor slaves a year.
It just goes to show us that globalization can actually CREATE manufacturing jobs in the US, huh?
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Your lying through your teeth so you can hire slaves.
Actually there are more like 10 million,
“As long as you’re pulling numbers out of your ass, why not make it an even 100 million?”
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I am trying to be honest. You free-traitors are deliberately dishonest.
Hunterite was supposed to come back at me and say that whenever foreigners move in and set up a factory, they’re just ripping off the local workers and all the profits go right back home —so that way we could talk about US manufacturing plants overseas:
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There you lying free-traitors go again. I told you I don’t care about the welfare of a foreigner. I don’t care about the local Chinese WOK producer when some US company moves into Ding Dong, China.
But you crackers want your slaves. So you will do anything and everything to acquire your new slaves, so you can reap in the profits off the wage disparity between American and China. Not because you crackers are particularly good at business.
No wonder the numbers stank; however, the sun does shine on the BLS data site and the number of truckers is more like 2 million:
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And there are 10 million who have a CDL, including bus drivers, and revoked or not renewed liscences.
My CDL isn’t valid because I no longer drive. There aren’t just 2 million voters who see you crackers taking jobs from Americans because you are traitors, there are far more who have been drivers.
Because of idiots like Hunterite?
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Your a traitor, you don’t deserve an American citizenship.
One of the greatest differences between a free-marketeer and a protectionist with regard to national security (using your earlier and never completed example of a bullet factory) is that a free-marketeer wants to make it easier to build bullet factories in the U.S., while a protectionist thinks that slapping a tariff on plastic lawn furniture will do the trick.
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It doesn’t matter if its a bullet, a speaker, or a car. Cheap labor will always undercut American labor.
“Protectionist Rhetoric Will Accelerate the Dollar’s Slide”
Is this cheap-labor market so delicate, so just talking about it will wreck the economy.
I think the word, “bubble” was made for this, one tiny pinprick and it pops.
Free-traders are too stupid to realize they had a valid argument about OIL. They never brought OIL up. HAHA, too late, morons. Reagan temporarily saved us from the free-traitors.
87% decline means a dollar is 13 cents, approximately one-eighth of what it was 57 years ago.
That's being cut in half approximately three times; or being cut in half every nineteen years.
By the rule of 72, that's between 3 and 4 percent devaluation (inflation) per year.
What would these numbers have been with the Carter years removed?
Cheers!
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