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To: dennisw
Forget about what I think. Everyone says we run a trade deficit with China, Japan and others. Are you going to dispute this?

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.

149 posted on 10/08/2009 11:24:39 PM PDT by TChris (There is no freedom without the possibility of failure.)
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To: TChris

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


150 posted on 10/09/2009 4:30:14 AM PDT by dennisw (It's not called the Wheel. It's called the Carousel.)
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To: TChris

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.


158 posted on 10/09/2009 8:14:10 AM PDT by dennisw (It's not called the Wheel. It's called the Carousel.)
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