Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Annual trade deficits are ALWAYS immediately detrimental to their nations’ economies.
There are only two presidential candidates that do not actually reject and/or effectively avoid giving any credence to the problem of USA’s chronic global annual trade deficits. But nether Mr. Donald Trump or Senator Bernard Sanders offer any explicit proposal to significantly reduce USA’s annual global trade deficits.
I’m a political orphan; there’s no candidate worthy of support.
I’m among the proponents of USA adopting a specific unilateral Import Certificate policy for conducting our global trade of goods. It is a primarily market rather than government driven policy that’s entirely funded by USA purchasers of foreign goods.
Google Wikipedia’s article entitled “Import Certificates”
and/or
The paragraphs entitled “Trade Balances' effects upon their nation’s GDP”
within the article entitled “Balance of trade”.
Today the principles are the same, but the process is quite different. Gold no longer is the currency of the realm; paper is. The truth now is: “He who prints the money makes the rules”-- at least for the time being. Although gold is not used, the goals are the same: compel foreign countries to produce and subsidize the country with military superiority and control over the monetary printing presses.
Since printing paper money is nothing short of counterfeiting, the issuer of the international currency must always be the country with the military might to guarantee control over the system. This magnificent scheme seems the perfect system for obtaining perpetual wealth for the country that issues the de facto world currency. The one problem, however, is that such a system destroys the character of the counterfeiting nation’s people-- just as was the case when gold was the currency and it was obtained by conquering other nations. And this destroys the incentive to save and produce, while encouraging debt and runaway welfare.
The pressure at home to inflate the currency comes from the corporate welfare recipients, as well as those who demand handouts as compensation for their needs and perceived injuries by others. In both cases personal responsibility for one’s actions is rejected.
When paper money is rejected, or when gold runs out, wealth and political stability are lost. The country then must go from living beyond its means to living beneath its means, until the economic and political systems adjust to the new rules-- rules no longer written by those who ran the now defunct printing press.
In the short run, the issuer of a fiat reserve currency can accrue great economic benefits. In the long run, it poses a threat to the country issuing the world currency. In this case that’s the United States. As long as foreign countries take our dollars in return for real goods, we come out ahead. This is a benefit many in Congress fail to recognize, as they bash China for maintaining a positive trade balance with us.
The artificial demand for our dollar, along with our military might, places us in the unique position to “rule” the world without productive work or savings, and without limits on consumer spending or deficits. The problem is, it can’t last.
But nether Mr. Donald Trump or Senator Bernard Sanders offer any explicit proposal to significantly reduce USA’s annual global trade deficits.
I think they are aware that if they pushed that issue for real, they'd commit suicide (political or otherwise). Some topics are just taboo.
Closing the trade deficit is a very easy thing for the US to do, via currency manipulation. But it's also easy to keep the US$ value high to force a trade deficit. This is what they've done for the last 35 years or so. It's a necessary part of a scheme to drain wealth from the US middle class and put it into a few pockets. It's worked so incredibly well, why do you think it would end? Granted we've pretty much maxed out the debt we've acquired to make this happen, but if interest rates can be kept around zero, there's room for additional growth there. Time for a new debt bubble!
I've through several stages after I started investigating this stuff. Understanding how it all fit together was followed by the solutions that seemed all too obvious and simple. Why was this allowed to happen in the first place, and why wasn't it fixed? "Follow the money".
Then after the crash in 2008 I figured people would finally stand up and we'd get some real change. Nope. Nothing. Instead the propaganda has kept everyone confused and divided. Then "where is this going?" led to AI and the end of consumer-capitalism... which means that the oligarchs will cease to depend on consumers, or those quaint notions like democracy and human rights. 9/11 and the culture of fear fits in with this nicely. Increased surveillance and spying, fewer rights.
Anyway, I'm glad you keep bringing this up. I do still have a faint glimmer of hope that people will wake up before it's too late. Not seeing any signs of that though.
Today the principles are the same, but the process is quite different. Gold no longer is the currency of the realm; paper is. The truth now is: “He who prints the money makes the rules”-- at least for the time being. ...
... In the short run, the issuer of a fiat reserve currency can accrue great economic benefits. In the long run, it poses a threat to the country issuing the world currency.
The artificial demand for our dollar, along with our military might, places us in the unique position to “rule” the world without productive work or savings, and without limits on consumer spending or deficits. The problem is, it can’t last.
ThatsRight19, you’re incorrect; annual trade deficits are ALWAYS immediately net detrimental to their nation’s economy and trade balances' economic effects upon their nations are net cumulative over time.
Annual trade deficits are ALWAYS indicate their nation then produced less goods and service products then otherwise; (other wise being a greater national gross domestic product, (GDP) if the nation had not experienced a trade deficit). A lesser GDP is accompanied with lesser jobs and to some extent a lesser median wage.
The U.S. dollar’s exchange rate and USA’s trade deficit are certainly inter-related. As to the extent of their relationships and if and how our dollar should be the regulated are separate questions and issues that need not be answered before we confront the issue of our annual global trade deficits.
Our trade deficits are a comparatively simpler problem that can be dealt with now.
If and when we ever get a handle on our monetary policy, we can revisit and reconsider any then existing problems directly or indirectly due to our then global trading and related policies.
I think they are aware that if they pushed that issue for real, they'd commit suicide (political or otherwise). Some topics are just taboo. ...
... Anyway, I'm glad you keep bringing this up. I do still have a faint glimmer of hope that people will wake up before it's too late. Not seeing any signs of that though.
RRuff, the trade deficit is a viable campaign issue.
I believe candidates and elected officials are not making explicit proposals to significantly reduce our annual global trade deficits because they have not yet found one that has already earned their voters’ confidences.
Most elected officials guess where the majority of their constituents are heading and then try to race ahead of them; they then pretend to be political leaders.
ThatsRight19, you’re incorrect; annual trade deficits are ALWAYS immediately net detrimental to their nation’s economy and trade balances' economic effects upon their nations are net cumulative over time.
Annual trade deficits are ALWAYS indicate their nation then produced less goods and service products then otherwise; (other wise being a greater national gross domestic product, (GDP) if the nation had not experienced a trade deficit). A lesser GDP is accompanied with lesser jobs and to some extent a lesser median wage.
The U.S. dollar’s exchange rate and USA’s trade deficit are certainly inter-related. As to the extent of their relationships and if and how our dollar should be the regulated are separate questions and issues that need not be answered before we confront the issue of our annual global trade deficits.
Our trade deficits are a comparatively simpler problem that can be dealt with now.
If and when we ever get a handle on our monetary policy, we can revisit and reconsider any then existing problems directly or indirectly due to our then global trading and related policies.
Respectfully, Supposn
Not really.
Quote:
It's accepted wisdom that the United States, despite recent problems, is still the strongest growth locomotive for the world economy, the pillar of the global system. What if we were to discover that, instead of being the pillar, that the United States was, in fact, the heart of a dysfunctional economic system, which is spreading instability, unemployment, and depression globally?
Quote:
No other nation on earth comes near to the commanding US military superiority in smart bombs, military IT, or in sheer force capabilities. The US position in the world since 1945, and especially since 1971, has rested on two pillars, however: The superiority of the US military over all, and, the role of the dollar as world reserve currency. That dollar is the Achilles heel of American hegemony today.
In my view, the world has entered a new, highly dangerous phase since the collapse of the US stock market bubble in 2001. I am speaking about the unsustainable basis of the very Dollar System itself. What is that Dollar System?
What soon became clear to US Treasury and Federal Reserve circles after 1971, was that they could exert more global influence via debt, US Treasury debt, than they ever did by running trade surpluses. One man's debt is the other's credit. Because all key commodities, above all, oil, were traded globally in dollars, demand for dollars would continue, even if the US created more dollars than its own economy justified.
The dollar became a political currency—do you have "confidence" in the US as the defender of the Free World? At first Washington did not appreciate what a weapon it had created after it broke from gold. It acted out of necessity, as its gold reserves had got dangerously low. It used its role as the pillar of NATO and free world security to demand allies continue to accept its dollars as before.
Soon, its trade partners held so many dollars that they feared to create a dollar crisis. Instead, they systematically inflated, and actually weakened their own economies to support the Dollar System.
What is little understood, is how the role of US trade deficits and the Dollar System are connected. The United States has followed a deliberate policy of trade deficits and budget deficits for most of the past (five) decades, so-called benign neglect, in effect, to lock the rest of the world into dependence on a US money system. So long as the world accepts US dollars as money value, the US enjoys unique advantage as the sole printer of those dollars. The trick is to get the world to accept. The history of the past (50) years is about how this was done, using WTO, IMF, and World Bank to name a few.
What is perverse about this system is the fact that Washington has succeeded in getting foreign surplus countries to invest their own savings, to be a creditor to the US, buying Treasury bonds.
But debt must be repaid you say? Does it ever? The central banks just keep buying new debt, rolling the old debts over. The debts of the USA are the assets of the rest of the world, the basis of their credit systems!
What has evolved is a mechanism more effective than any the British Empire had with India and its colonies under the Gold Standard. So long as the US is the sole military superpower, the world will continue to accept inflated US dollars as payment for its goods. Developing countries like Argentina or Congo or Zambia are forced to get dollars to get the IMF seal of approval. Industrial trading nations are forced to earn dollars to defend their own currencies. The total effect of US financial and political and trade policy has been to maintain the unique role of the dollar in the world economy.
This is a kind of Dollar Imperialism more slick than anything the British Empire even dreamed of. It is a part of the current America "Empire" debate no one mentions. Instead of the US investing in colonies like England to earn profits on the trade, the money comes from the client states into the US economy. The problem is that Washington has allowed this perverse system to get out of all control to the point today it threatens to bring the entire world to the point of collapse. Had the US instead promoted long-term policy of investing in the economic growth and self-sufficiency of countries like Argentina or Congo, rather than bleeding them in repayment of unpayable dollar debts, the world would look far less unstable today.
The problem is this process of creating debt, domestic and foreign, to keep the US economy going, has gathered so much momentum it risks destroying what remains of the US manufacturing and technology base.
It is caught in its own web: American jobs, hi-tech jobs as well as factory jobs, are vanishing permanently as US factories source to China, India or other cheap areas. If Washington pressures China and others to cut back exports they risk to kill the goose that lays golden dollar eggs.
US economic hegemony in this distorted Dollar System increasingly depends on a rising rate of support from the rest of the world to sustain US debt levels. Like the old Sorcerers' Apprentice. But the point is past where this can be gotten easily. That is the real significance of the US shift to unilateralism and military threats as foreign policy. Europe can no longer be given a piece of the Third World debt pie as in the 1980's. Japan has to cough up even more, as does China now.
Even ordinary Americans have to give up their pension promises. If the Dollar System is to remain hegemonic, it must find major new sources of support. That spells likely destabilization and wars for the rest of the world.
As Henry Kissinger once noted, "Who controls the food supply controls the people; who controls the energy can control whole continents; who controls money can control the world."
Last edited by Thatsright19; 03-20-2016 at 03:42 PM..
Annual trade deficits are ALWAYS immediately detrimental to their nations’ economies.
No, they are not.
Quote:
Originally Posted by Supposn
Google Wikipedia’s article entitled “Import Certificates”
and/or
The paragraphs entitled “Trade Balances' effects upon their nation’s GDP”
within the article entitled “Balance of trade”.
Respectfully, Supposn
Those articles are a fantastic display of sophomoric sophistry completely devoid of any economics and certainly absent any economic math.
Neither individuals nor States enter into trade in order to make themselves worse off than they already are.
RRuff, I do not consider the trade deficit as a statistical problem or as an accounting problem subject to a bookkeeping solution. USA’s annual trade deficits are particularly detrimental to our GDP, numbers of jobs and our median wage. (I.E. USA’s annual trade deficits are particularly detrimental to our middle-income earners and their dependents and enterprises more dependent upon USA wage levels).
Within our current trade policy or lack of policy), USA purchasers are correct. They purchase more imported goods because it’s to their better financial interests to do so.
The problem is what is now to the best financial interests of USA purchasers of foreign goods are in aggregate to the detriment of USA’s economy.
Although all USA purchasers benefit from cheaper foreign products, the benefits do not nearly compensate for the USA trade deficits’ detrimental aggregate effects upon the finances of USA employees, their dependents and any USA enterprises that are all more dependent upon the wage levels of USA employees.
I’m among those that believe the solution would transform USA’s global trade policy in a manner that would lead USA purchasers and foreign purchasers to increase their proportions of spending for USA produced goods and services while rather than reducing, the solution would induce improvements of USA’s GDP, numbers of jobs and median wage.
I’m among those that consider a transferable Import Certificate policy to be such a solution.
Especially when those goods are world class products at lower prices representing the best value for our hard earnd dollars.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
