[Black_Shark]

Funny thing. Economics tells us again and again that free trade is the best trade policy due to comparative advantage and us “producing” by exporting (otherwise called the Roundabout way to wealth coined by an economist David Ricardo). Think about it... We give countries worthless pieces of paper. They give us cars, steel, etc. Sounds good to me!

Trade Deficits are also a good thing IF AND ONLY IF the excess imports that we bring in are used to INVEST in our future rather than fund current consumption (as it is now). Funding current consumption is unsustainable and will lead to a collapse.

[dennisw]

. We give countries worthless pieces of paper. They give us cars, steel, etc. Sounds good to me!

Those are worthless pieces of paper (our US dollar) only if the USA plans on defaulting on all the US Treasuries those nations have also bought. China has piled up a lot of worthless pieces of papers so is now able to exert more control over us. Obama bowed down to Hu Jun Tao last time they met

If you owe $400,000 worthless pieces of paper to your creditors do you plan on screwing them via a default?

[algernonpj]

... Economics tells us again and again that free trade is the best trade policy due to comparative advantage and us “producing” by exporting (otherwise called the Roundabout way to wealth coined by an economist David Ricardo). ...

Ahh .. good ole Ricard and 'comparative advantage'.

For Ricardo's theory of comparative advantage to work, a country's labor, capital, and technology must not move offshore. offshore. Ricardo himself admits this. International immobility is necessary to prevent a business from seeking an absolute advantage by going abroad. His theory only works for such factors as geography and climates. Ricardo assumes that patriotism will check investment abroad even under absolute advantage.

From: The Works and Correspondence of David Ricardo, Vol. 1 Principles of Political Economy and Taxation [1817], Chapter Vii, On Foreign Trade:
"The same rule which regulates the relative value of commodities in one country, does not regulate the relative value of the commodities exchanged between two or more countries"
...
From Ricardo's discussion of the famous example of Portugal producing wine and England producing wool:
"The difference in this respect, between a single country and many, is easily accounted for, by considering the difficulty with which capital moves from one country to another, to seek a more profitable employment, and the activity with which it invariably passes from one province to another in the same country.

It would undoubtedly be advantageous to the capitalists of England, and to the consumers in both countries, that under such circumstances, the wine and the cloth should both be made in Portugal, and therefore that the capital and labour of England employed in making cloth, should be removed to Portugal for that purpose.

Experience, however, shews, that the fancied or real insecurity of capital, when not under the immediate control of its owner, together with the natural disinclination which every man has to quit the country of his birth and connexions, and intrust himself with all his habits fixed, to a strange government and new laws, check the emigration of capital. These feelings, which I should be sorry to see weakened, induce most men of property to be satisfied with a low rate of profits in their own country, rather than seek a more advantageous employment for their wealth in foreign nations."

Ricardo's theory of comparative advantage does not apply to today's world. Just look at our current economic situation.