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Old 04-24-2017, 07:17 PM
 
12,075 posts, read 14,632,633 times
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Quote:
Originally Posted by ZachF View Post
Its because the United States (And some others like Britain) keep basically an open capital account and allow other countries to push their savings into the United States basically at will. If China(Or Japan) buys $100 billion in US assets (treasuries, dollars, etc), then the United States mathematically *has* to run a $100 billion deficit, because they both must add to zero.

Michael Pettis talks about this at length on his blog and his Book, "The Great Rebalancing" I highly recommend both. Here he explains it much better than I can:

Mexico

The US dollar being the world's reserve currency is actually a *huge* cost rather than a benefit. The reason the US is in this mess is because Kennedy allowed foreigners much much greater access to dollars, eventually leading to the collapse of Bretton Woods, and the see-sawing FOREX mess we have today with commonplace currency crises and investment bubbles.
It used to be the dollar was backed by gold. One of Nixon's best moves was removing the peg to gold. It's bad enough foreign countries take our jobs. They'd also have our gold!
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Old 04-24-2017, 09:12 PM
 
Location: Ruidoso, NM
5,179 posts, read 4,840,309 times
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Quote:
Originally Posted by ZachF View Post
Its because the United States (And some others like Britain) keep basically an open capital account and allow other countries to push their savings into the United States basically at will. If China(Or Japan) buys $100 billion in US assets (treasuries, dollars, etc), then the United States mathematically *has* to run a $100 billion deficit, because they both must add to zero.
I thought it went the other way. They don't really want the currency, but rather the exports. If they run a trade surplus then they must take currency (or bonds, notes) in exchange, or they can purchase other assets like land or businesses.

Thinking about it, I don't know how it could work the other way at all. Trade is conducted by thousands of individual businesses, not the government. The government can easily use monetary means to make up for a trade imbalance, but trade cannot be used to make up for a monetary imbalance. If you wanted to fix the monetary imbalance it would be easy, just reduce the interest rate.

What he states about Mexico isn't unusual at all. They run a surplus with the US and a deficit with everyone else. This is because the US is the only country that *wants* to import more than it exports. Actually just the oligarchs want a trade deficit and inflated US$.
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Old 04-24-2017, 09:15 PM
 
Location: Ruidoso, NM
5,179 posts, read 4,840,309 times
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Quote:
Originally Posted by pvande55 View Post
It used to be the dollar was backed by gold. One of Nixon's best moves was removing the peg to gold. It's bad enough foreign countries take our jobs. They'd also have our gold!
It would have never happened if we were still on the gold standard.

Fiat money could be a great thing but unfortunately it has been used to screw over the middle class.
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Old 04-24-2017, 11:05 PM
 
Location: midwest
1,358 posts, read 973,411 times
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Isn't the purpose of Planned Obsolescence to keep manufacturing from declining?

NET Domestic Product is never discussed. It does not take into account all of the Depreciation on the Demand Side.

http://ec.europa.eu/eurostat/statist...c_product_(NDP)

Automobiles are treated like bananas. They are added to GDP but not subtracted to compute NDP.
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Old 04-25-2017, 08:31 AM
 
Location: NH/UT/WA
283 posts, read 174,498 times
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Quote:
Originally Posted by rruff View Post
I thought it went the other way. They don't really want the currency, but rather the exports. If they run a trade surplus then they must take currency (or bonds, notes) in exchange, or they can purchase other assets like land or businesses.

Thinking about it, I don't know how it could work the other way at all. Trade is conducted by thousands of individual businesses, not the government. The government can easily use monetary means to make up for a trade imbalance, but trade cannot be used to make up for a monetary imbalance. If you wanted to fix the monetary imbalance it would be easy, just reduce the interest rate.

What he states about Mexico isn't unusual at all. They run a surplus with the US and a deficit with everyone else. This is because the US is the only country that *wants* to import more than it exports. Actually just the oligarchs want a trade deficit and inflated US$.
I picked the wrong one, this one explains it better:

Is Peter Navarro Wrong on Trade? - Carnegie Endowment for International Peace
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Old 04-25-2017, 08:46 AM
 
4,229 posts, read 1,980,745 times
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As bad as the economics has gotten here lately, you'd think we'd somehow been teleported to Austria.

-- The gold standard was outdated already by the late 19th century. It would be a hideous anachronism in any modern economy.

-- Bretton Woods was a scheme to foster post-WWII growth and redevelopment. It was outmoded by 1960 and utterly indefensible by the time of Nixon.

-- The alternative to trade deficits includes lots of inflation. Deficits arise in part when US producers can compete on quality, but not on price. (see sneakers). Or of course, when they can't compete on either one (see automobiles). It would not be a good thing for US consumers if they were somehow forced to pay more for lower quality.

-- The US pays in dollars for its imports. These dollars accumulate in foreign central banks after being converted to local currency for local producers. Some of those accumulated dollars are used to finance purchases of US exports. Some are used to finance purchases from third countries who will take dollars in payment. There is nothing else to do with any remainder but to invest in dollar-denominated assets. Some dollars go into real estate or corporate stocks and bonds, but a long-time favorite has been the purchase of US Treasury securities on account of their legendary safety and security. The dollar proceeds from such purchases of course flow into the Treasury General Fund, where they become available for appropriation on the same sort of basis as tax dollars.
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Old 04-25-2017, 08:53 AM
 
Location: NH/UT/WA
283 posts, read 174,498 times
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Quote:
Originally Posted by Pub-911 View Post
As bad as the economics has been here lately, you'd think we'd somehow been teleported to Austria.

-- The gold standard was outdated already by the late 19th century. It would be a hideous anachronism in any modern economy.

-- Bretton Woods was a scheme to foster post-WWII growth and redevelopment. It was outmoded by 1960 and utterly indefensible by the time of Nixon.

-- The alternative to trade deficits includes lots of inflation. Deficits arise in part when US producers can compete on quality, but not on price. (see sneakers). Or of course, when they can't compete on either one (see automobiles). It would not be a good thing for US consumers if they were somehow forced to pay more for lower quality.

-- The US pays in dollars for its imports. These dollars accumulate in foreign central banks after being converted to local currency for local producers. Some of those accumulated dollars are used to purchase US exports. Some are used to make purchases from third countries who will take dollars in payment. There is nothing else to do with any remainder but to invest it in dollar-denominated assets. Some go into real estate or corporate stocks and bonds, but a long-time favorite has been purchase of US Treasury securities on account of their legendary safety and security. The dollar proceeds from such purchases of course flow into the Treasury General Fund, where they are available for appropriation on the same sort of basis as tax dollars.
...says the guy who defends Venezuela's economic policies
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Old 04-25-2017, 09:08 AM
 
4,229 posts, read 1,980,745 times
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Not so much since Hugo Chavez died. For those actually familiar with recent Venezuelan history, the plain facts are that Chavez and the Bolivarian Revolution were HUGE BOON to the Venezuelan people. Less so of course to imperialists and the brutal families of the oligarchy who had exploited the nation's wealth and people for decades until finally booted out. Sadly though, Maduro is no Chavez.

None of this of course actually belongs in this thread.

Last edited by Pub-911; 04-25-2017 at 09:35 AM..
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Old 04-25-2017, 09:33 AM
 
4,864 posts, read 4,884,604 times
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Quote:
Originally Posted by mathjak107 View Post
why ? the world has a lot to offer today in world class products .

decades ago the world had little to offer us . our auto manufacturers cranked out crap and we bought those little Japanese umbrellas you put in drinks .

today each country excells at something else . they do it better and cheaper than anyone else . we as consumers benefit with better , world class products , than we ever had before for our hard earned dollars .

it is nonsense thinking we should export more than we import . we are all globally linked now .

we only buy foreign products for one reason . they represent the better quality and value for our dollars because someone else does it better and cheaper .
Countries no longer excell at anything, multinational corporations do excelling by seeking and exploiting people desperate to work for less. Note that capital can flow between contries much more easily than labor, this creates very exploitative global linkages one major dollar emitting country benefits the most of.
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Old 04-25-2017, 02:38 PM
 
Location: Ruidoso, NM
5,179 posts, read 4,840,309 times
Reputation: 4206
Quote:
Originally Posted by Pub-911 View Post
The alternative to trade deficits includes lots of inflation. Deficits arise in part when US producers can compete on quality, but not on price. (see sneakers). Or of course, when they can't compete on either one (see automobiles). It would not be a good thing for US consumers if they were somehow forced to pay more for lower quality.
Good post, but I disagree with this part.

What you are describing is comparative advantage, not a trade deficit. In an ideal world the currency value would eventually adjust to balance trade. The US would export where they have a real advantage and import where they have a disadvantage. Trying to get back to the topic of this thread, inherently low productivity manufacturing does not make sense in any advanced country, but that same country should have the resources and productivity to compete in other areas, making up the difference. Not necessarily in manufacturing, but in services. The "wages are too high" argument can be swiftly and easily dealt with by depressing the currency exchange value. Or in the case of the US simply ceasing to boost it.

The fact that other industrial economies tend to run a significant trade surplus while the US runs a continual high deficit, should show that something besides "free trade" and comparative advantage are going on.
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