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Buyers surrender dollars in order to acquire US Treasuries. If the Treasury itself is the seller, it puts those dollars into the General Fund.
Meanwhile, US$ and all other currencies are simply claims on the goods and services output by the issuing economy. Once entering into the international arena, all any of them can do is directly or indirectly make their way back home again. This is one of the most basic tenets of international trade and finance, one that is unaltered by such trivial footnotes as petro-dollars or that some small nations use US$ instead of their own currencies.
If the Treasury itself is the seller, it puts those dollars into the General Fund.
What you are describing is the equivalent of me selling you something (for US$) and then you buy a bond from me with interest. It is a way for you to earn interest on the US$ you own. This isn't money coming back, rather it is interest going out.
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Once entering into the international arena, all any of them can do is directly or indirectly make their way back home again.
The length of time it takes for these US$ to "find their way home" is indeterminate. It could be forever.
When it does come back, it's by purchasing US real assets. Land, resources, and companies. This is the functional equivalent of buying more than you can pay for, and selling off your wealth generating property to make up the difference.
I'm amazed that this pseudo-economic sophistry around "free trade" and persistent trade deficit still persists. Just look at the numbers for US wages and debt for the last 40 years, and it's obvious that something is horribly wrong.
What you are describing is the equivalent of me selling you something (for US$) and then you buy a bond from me with interest. It is a way for you to earn interest on the US$ you own. This isn't money coming back, rather it is interest going out.
How do you think that bond was bought? With money. You give the US Treasury US dollars and they give you a bond, and pay you interest on it. Very easy. Not sure why you are not getting this basic concept.
How do you think that bond was bought? With money. You give the US Treasury US dollars and they give you a bond, and pay you interest on it. Very easy. Not sure why you are not getting this basic concept.
I understand it very well, thank you. The bond is a claim on US$ that pays interest. What happens when the bond's term is up? The buyer still owns US$, only now they get interest as well.
The only "money coming back" that would be beneficial for US production, productivity, and prosperity would be purchasing US goods and services. But obviously since we still have a large net deficit of trade, that isn't happening.
I understand it very well, thank you. The bond is a claim on US$ that pays interest. What happens when the bond's term is up? The buyer still owns US$, only now they get interest as well.
Well most treasury buyers roll said treasuries when they mature so they receive usd and then spend them again. They don't own USD they'd own US dollar denominated debt
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The only "money coming back" that would be beneficial for US production, productivity, and prosperity would be purchasing US goods and services. But obviously since we still have a large net deficit of trade, that isn't happening.
This is different than the simple function of usd and usd debt
They don't own USD they'd own US dollar denominated debt
My point is that for the purposes of this discussion, it is no more than a semantic distinction.
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This is different than the simple function of usd and usd debt
Precisely. The financial shenanigans that the US performs with their fiat money is immaterial. What ultimately matters for the prosperity of any country is productivity. Productivity requires maximized investment in the means to produce. R&D, education, machines, buildings, infrastructure, etc. Our investment in productive enterprise has seriously degraded due to our globalization, deficit trade, and debt escalation. Our system is specifically set up to encourage investment in other countries. Profit derived from the domestic economy leaves the country instead of being reinvested in domestic production. If you want to know *why* this has happened, just follow the money. It's hiding in plain sight.
Will US goods be cheaper? Can you provide anything that would support that?
Can you provide anything that says they would not be? Goods are based on supply and demand. If you have supply drying up on one end, more people will jump in the market to meet that supply. What we import from Mexico can be found elsewhere , and if we have more demand, these alternative places will be willing to deal on the cost, since their export quantity goes up, and they make more money.
The products some people are using as examples are ridiculous, like Beer, for instance. Look at all the Micro Beer Breweries that have jumped up all over the Nation. They would be more than happy to fill that void, and not have the Competition of Mexican Beer. Mexico has no bargaining chips in this Game. Face it. They are on the short end of the stick. Mexico also stands to lose what Companies are there from the US now, and they need every job they have, so they only have an option of cutting off their noses to spite their face.
Next time you go to the grocery store, look at the tags on some of the produce. Even in California they cannot grow some (or enough) vegetables all year. Avocados are the biggest one, but also tomatoes, and even sugar is imported from Mexico, not to mention tequila and beer. I suppose those items are not critical, and we can manage to pay more and use less, but eventually alternatives may be found, and the tariff revenue could dry up.
"tomatoes"
Years back,I recall a big field of tomatoes near the runways of Moffett Field NAS.
Beautiful tomatoes and they never got harvested because ( we were told) the grower had already filled his quota and it would be cheaper to just let them rot in the field.
Does this over production still occur in California ?
Can you provide anything that says they would not be?
Our labor is considerably more expensive however I don't need to provide anything as I didn't make a claim another person did and I asked them to support the claim
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Goods are based on supply and demand. If you have supply drying up on one end, more people will jump in the market to meet that supply. What we import from Mexico can be found elsewhere , and if we have more demand, these alternative places will be willing to deal on the cost, since their export quantity goes up, and they make more money.
Sure we can get imports elsewhere but ask yourself if they were cheaper than Mexico why aren't we doing it already?
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The products some people are using as examples are ridiculous, like Beer, for instance. Look at all the Micro Beer Breweries that have jumped up all over the Nation. They would be more than happy to fill that void, and not have the Competition of Mexican Beer. Mexico has no bargaining chips in this Game. Face it. They are on the short end of the stick. Mexico also stands to lose what Companies are there from the US now, and they need every job they have, so they only have an option of cutting off their noses to spite their face.
Irrelevant to my question
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