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To TRUMP, trade war means total war, but in the short term that requires artificially making other countries less competitive relative to the US (through import taxes) and/or making US companies more competitive than other countries (through subsidies). Taxation only can work if the country you are targeting has a very high percentage of its exports to the US, limiting its short-term options. Subsidies never work! If you subsidize the nail industry, then 1,000s of new firms pop up out of nowhere to get the subsidy.
To TRUMP, trade war means total war, but in the short term that requires artificially making other countries less competitive relative to the US (through import taxes) and/or making US companies more competitive than other countries (through subsidies). Taxation only can work if the country you are targeting has a very high percentage of its exports to the US, limiting its short-term options. Subsidies never work! If you subsidize the nail industry, then 1,000s of new firms pop up out of nowhere to get the subsidy.
The much simpler and efficient solution is a lower US$ exchange value.
It seems funny that we sit around and debate whether or not the trade deficit is a bad thing (it is if you are one of the 99.9% in the US), and if so, how to fix it. The fix is easy. It's always been easy. The truth is that oligarchs both domestic and foreign don't want it fixed! They prosper greatly from it while the the rest of us pay the price. In fact the reason it has existed for so long is precisely because they've manipulated laws and policies to force it!
I'm not sure what Trump's game is. I don't pay a lot of attention to him. But I'll be shocked and amazed if he actually is able to reduce the trade deficit in an beneficial and intelligent way. More likely he will "try" all the wrong things and we'll pay for it again, so the thought of ever closing the gap will be buried for good.
Or not at all, when manufacturers like yourself suspend shifting production from here to other places. It may cost you more to produce your widget here and it may cost the consumer more to buy the widget but guess what? At least the money is staying within the country. You cannot perpetually bleed wealth and remain prosperous.
The whole process is meant to be inflationary. If that extra or new money staying here supports more blue collar jobs then fine by me. But if the money ends up with us rich folks it makes little sense.
We don't bleed 'wealth'. We bleed money/fiat, and with fiat that can be created out of thin air we buy and receive real stuff, real goods. Which is real wealth. Imports are benefits. Imports are not only cheaper, but by using imports we save on our own resources and environment.
The whole process is meant to be inflationary. If that extra or new money staying here supports more blue collar jobs then fine by me. But if the money ends up with us rich folks it makes little sense.
We don't bleed 'wealth'. We bleed money/fiat, and with fiat that can be created out of thin air we buy and receive real stuff, real goods. Which is real wealth. Imports are benefits. Imports are not only cheaper, but by using imports we save on our own resources and environment.
Good first point. As far as the second one, you're assuming the "fiat" debt never has to be repaid. That debt remains long after the plastic crap we imported has been buried in a landfill and ultimately must be repaid with "real stuff". I guess massive trade deficits make sense if the idea is to run up the national "credit card" as much as possible and then default.
Good first point. As far as the second one, you're assuming the "fiat" debt never has to be repaid. That debt remains long after the plastic crap we imported has been buried in a landfill and ultimately must be repaid with "real stuff". I guess massive trade deficits make sense if the idea is to run up the national "credit card" as much as possible and then default.
The debt burden is the interest, since the debt will never be paid off. And interest can always be paid off with fiat. Unless for some odd reason we decide to sell off national assets to pay down debt, nothing 'real' ever needed. Onerous inflation could be the boogey man, not insolvency.
... You are confusing GDP with GDP/capita. The later is the only one we should care about.
RRuff, we’re in agreement about somethings. Although I frequently refer to GDP, it is the purchasing powers of the GDP per capita and the median wage that’s the best indicators of our nation’s economic condition at any specific moment.
[quote=Hoonose;47005994]The debt burden is the interest, since the debt will never be paid off. And interest can always be paid off with fiat. Unless for some odd reason we decide to sell off national assets to pay down debt, nothing 'real' ever needed. Onerous inflation could be the boogey man, not insolvency.[/QUOTE]
Hoonose, I suppose that makes some sense. Death is not to be feared but beware if you no longer have a pulse and you cease to breath.
... We don't bleed 'wealth'. We bleed money/fiat, and with fiat that can be created out of thin air we buy and receive real stuff, real goods. Which is real wealth.
Hoonose, that’s great! We can all borrow as much as we’re able, and spend it without considering tomorrow because the money is not real wealth. What do we tell the mortgage holder when we can’t pay? It was all a mistake? They loaned us money of little worth and it’s unreasonable to require we struggle to repay the loan?
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Quote:
Originally Posted by Hoonose
Imports are benefits. Imports are not only cheaper, but by using imports we save on our own resources and environment.
A nation’s annual trade deficit drags upon the nation’s GDP and numbers of jobs; that doesn’t promote a higher median wage.
True, trade deficits of goods do to some extent reduces the rates of our natural resource consumptions and productions’ environmental contaminations.
You’re suggesting by further reducing USA’s production we can increase our working poor’s population segment and further reduce their living standards?
To TRUMP, trade war means total war, but in the short term that requires artificially making other countries less competitive relative to the US (through import taxes) and/or making US companies more competitive than other countries (through subsidies). Taxation only can work if the country you are targeting has a very high percentage of its exports to the US, limiting its short-term options. Subsidies never work! If you subsidize the nail industry, then 1,000s of new firms pop up out of nowhere to get the subsidy.
Frihed89, I’m among the proponents for USA adopting the unilateral proposal for global trade described by Wikipedia’s “Import Certificates” article. Increased prices passed on to USA purchasers of imported goods would at minimum sustainable extent be the federal government’s direct expenditure’s due to the policy, (i.e. the value assessing of goods passing through USA’s borders and administrative costs). Additional increases of prices would be due to markets’ behaviors.
Tariffs can provide net federal tax revenues; the Import Certificate policy provides no net tax revenues but it would indirectly subsidize USA’s exported goods prices to an extent entirely due to markets’ behaviors. This subsidy is at no additional cost to any USA entity.
The policy increases USA’s GDP and number of jobs more than otherwise by eliminating or almost eliminating USA’s chronic annual trade deficits of goods.
Last edited by toosie; 01-31-2017 at 05:24 PM..
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