It makes the world’s savers reluctant to be exposed to the U.S. dollar.Posted on 10/05/2009 4:25:24 AM PDT by expat_panama
The United States has been hollowed out. It no longer manufactures goods. Once the factory of the world, the U.S. now manufactures debt. The high wage manufacturing jobs have been out-sourced to low wage economies. The demise of U.S. manufacturing is at the core of the decline of America, its chronic trade deficits and growing international indebtedness. It makes the world’s savers reluctant to be exposed to the U.S. dollar.
There is one problem with this widely held view: It is factually wrong.
The value of U.S. manufacturing output in real terms (adjusted for inflation) was a little more than $3 trillion in 2008. That is up from $1.2 trillion in 1972. If the U.S. manufacturing sector was a separate country, it would be the world’s 5th largest economy (behind the rest of the U.S., Japan, China and Germany). The U.S. remains the world’s largest manufacturer. Full stop.
Although international comparisons are fraught with measuring problems, it appears that the U.S. share of world manufacturing is roughly the same as the combined total of the BRICs (Brazil, India and Russia account for a combined 11-12% share).
The data also suggests that the impressive rise of Chinese manufacturing has come at the expense of Japan and other East Asian countries more than the United States, which the UN data suggests actually saw a small rise of its global share in recent years.
China has largely injected itself into the production chain at the labor intensive stages, so that television or electronic good that may have been made in Japan or Taiwan or South Korea now says made in China.
[snip]
(Excerpt) Read more at realclearmarkets.com ...
LOL. It took a one world Globalist and leftist like Buffet to finally school him that they aren’t all the same thing? Whatever works, I guess. Even so, I don’t doubt that he’ll be back to the same old ignorance as soon as it’s convenient.
I just skimmed it (because I’m on dial-up at the moment), but I think I saw a thread running right now about how consumer debt has fallen (as it is wont to do during recessions), and we are all doomed.
Forget about what I think. Everyone says we run a trade deficit with China, Japan and others. Are you going to dispute this?
Your Hawaii example is absurd.
Discuss trade deficits and surpluses between nations. Not some trade deficit you think Hawaii has
Those 3 things are different? Don't tell dennisw, he's been conflating them for years.
You must be an idiot with reading comprehension problems because I never mix those up.
You belong to the free traitor school of economics that thinks trade deficits are good because ya see....they are actually capital surpluses. Signs that others are so eager to invest in us LOL I remember those dumb posts of yours and you have learnt nothing since then
This brings us to today where foreigners are not buying US Treasuries like they used to because they fear they will get paid in depreciating dollars
Trade deficits don't fund capital account surpluses?
A capital account surplus isn't a sign that others are eager to invest in us ?
That’s it . . . you lost him. (He was hanging by a thread, anyway).
More absurd than, say, discussing California and Arnold Schwarzenegger?
Nope, I'm not. But the problem is that the term doesn't mean what you think it means.
The TRADE and the DEBT are two different things. A TRADE deficit does not equal a BUDGET deficit.
Your Hawaii example is absurd.
Discuss trade deficits and surpluses between nations. Not some trade deficit you think Hawaii has
No, it's not absurd at all. It's precisely the same thing.
The only difference is that we don't TRACK interstate trade the way we track international trade. But if we did, the reports would show that Hawaii has a massive trade deficit.
THAT'S WHAT IT MEANS, FRIEND.
Trade deficits are a normal consequence of specialization. The only difference is one of scale.
I run a "trade surplus" of computer services. My employer pays me to provide that service, but I don't buy anything from them.
I run a "trade deficit" of nearly everything else, because I pay others to provide goods and services for me. I pay for someone else to grow and process my food. I paid for someone to build my house. I paid for someone to make a vehicle for me to drive. All those jobs were "outsourced" because someone else could do it better and much more cheaply than I could do it myself.
I run a trade deficit with Chrysler Motors, because I have NEVER sold anything to them, but they have sold multiple vehicles to me.
I run a trade deficit with the local grocery store, because I buy lots of food there, but they never hire me to do their computer work.
I'm not in debt to any of them.
Should I panic? Should I protest to Chrysler that they're being unfair to me? Should I stop shopping at that store and DEMAND that they use my computer services before I'll buy their food?
That's EXACTLY the same situation between countries, only on a larger scale.
When you scale that situation up to the size of a country, you have a "trade deficit". You have others do things for you that they can do better and/or cheaper than you can.
As long as I'm spending less than I earn, all is well. Even if there is a HUGE imbalance between what any single trading partner buys from and sells to me.
The TRADE and the DEBT are two different things. A TRADE deficit does not equal a BUDGET deficit......
Are you trying to school me?
As a would be teacher you should use more precise language
Federal budget deficit is what you mean
Rude, can we send an ambulance over to check out Dennis? He finally understands......I'm afraid he might have bumped his head.
--and that makes for a trade surplus. OK, we sold lots of capital assets when the dollar was higher, and now we can buy them back with cheap dollars so we can clean up again with the next rebound.
Are we still saying this is bad?
Dunno, hard to tell.
OK, we sold lots of capital assets when the dollar was higher, and now we can buy them back with cheap dollars so we can clean up again with the next rebound.
Translation --
You fantasize yourself as an investor/trader cleaning up
You could give a shit about USA except how to live off the carcass
I live in continental USA and you live where?
Panama?
But todd mase rude chris live in USA so you don't necessarily have to live abroad to be a trade traitor
Or to be an economic traitor like the Wall Street derivatives pirates .... Who get billions in bailouts. I could give a shit what they do if they didn't get taxpayer funded bailouts
There you go again, confusing debt with a trade deficit. Clown.
There you go again, confusing debt with a trade deficit. Clown.
A United States trade deficit is a debt. Same as if I run up a credit cared debt
I have creditors and the United States has creditors. China and Japan for example
Some nations are debtor nations and some are creditor nations
If we are not really a creditor nation then go ahead and state your case
No it isn't. All my goods purchases (foreign and domestic) are paid for with cash.
When those nasty foreigners get my cash, they can turn around and buy T-bills, for instance, or US goods. Their choice. How do you figure my cash puts the US in debt?
You and I live within a US dollar trade area called the United States of America. Look at your paper dollar bill and it says by law it must be accepted for all debts private and public. All our dealings are in US dollars and you have described a few of yours. You and I do not deal in yen or rubles
This is very different from foreign trade where US dollars trade against other currencies and rise and fall against them. The US dollar rises and falls due to trade deficits/surpluses and USA internal economic conditions such as the Fed currently “printing money” at a breakneck speed. What the Fed sets as interest rates also is a factor. Dittos for bond rates here
Australia raised its interest rates a few days ago and its currency soared against the USD. A case of the trade deficit/surplus not being a factor in currency fluctuation.
Read 158 and use all your powers of reading comprehension.
Doesn’t make the trade deficit debt. Try again?
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