Another US Tech Trade Deficit

eldavojohn writes "The United States is suffering again from a massive trade deficit — $38.3 billion in 2006. And it's been going on since 2002. From the press release: 'In 2006, Asia supplied 60 percent of all US imports of advanced technology products. Europe supplied more than 20 percent, and North America more than 15 percent.'"

How long

[downix (84795)]

When a country exports all of it's facilities, manufacturing, and infastructure overseas, how long before that countries trading partners realize that they can cut the country out of the loop entirely?

Re:How long

[MontyApollo (849862)]

The US is a huge consumer. They can't cut us out all the way.

Re:How long

[downix (84795)]

And with what money shall the US consume if it does not manufacture anything to sell for profit? Technology was the last real growth manufacturing field. Without turning one thing into another, to sell for profit, there is no more real consumption as rather than generating money, you are just recycling money. And then, when you buy foreign made goods, that recycled money leaves the country, leaving you with less to purchase with. It is an entropic cycle, and will eventually fail.

Re:How long

[russ1337 (938915)]

>>> with what money shall the US consume if it does not manufacture anything to sell for profit?

What are you talking about? You do what the rest of us do and put it on your credit card [brillig.com]

Re:

[kripkenstein (913150)]

And with what money shall the US consume if it does not manufacture anything to sell for profit? Technology was the last real growth manufacturing field.

On that note, perhaps you or someone else understands enough economics to explain something to me.

The US has a trade deficit with (say) Japan of $80 billion, if I am not mistaken. Now, assuming 1 PC per Japanese citizen (sure, not all have one, but some have more than one), that is over 100 million PCs. Say each PC pays Microsoft $200 (for Windows + Of

Re:How long

[joggle (594025)]

Is this $20 billion included in the $80 billion trade deficit? That is, would it be $100 billion without Microsoft?

Yes, this is included in the trade deficit calculation so yes, if your numbers were correct then the deficit would be $100 billion without Microsoft. Washington state is one of the very few states with an international trade surplus in large part due to Microsoft and Boeing. Other companies with a trade surplus are restaurant chains that sell franchises overseas (such as Starbucks, McDonalds, and KFC).

On the other hand, is perhaps this money not arriving to the US, but rather received only by "Microsoft Japan"

The money is funneled through Microsoft Japan. Microsoft in Redmond still gets a slice of every license sold there (or at least for the great majority of licenses). In the case of restaurant chains usually the franchises are locally owned and operated so the American company only profits from the initial franchise sale and (sometimes) from the ingredients sold.

Re:

[RexRhino (769423)]

And then, when you buy foreign made goods, that recycled money leaves the country, leaving you with less to purchase with. It is an entropic cycle, and will eventually fail.

U.S. dollars only have value because they can be spent on U.S. goods. When the U.S. has a 'trade deficit', it means that those foreign countries are sitting on those dollars we send them (or, more likely, purchasing U.S. government bonds). We give them peices of paper (or nowadays, bits on a computer), and they send us DVD players and Barney toys.

Eventually, they will spend those dollars on U.S. goods, as that is the only thing they are good for, or sell them to someone else who will spend those dollars on

Intl. trade takes place in black gold: Oil!

[Burz (138833)]

Those exporting countries are willing sit on trillion+ dollar reserves because oil typically hasn't been available for import with any currency other than US dollars. Cutting a deal with Saudi Arabia (the OPEC swing producer) to price oil only in dollars in exchange for propping up their oppressive dictatorship, has caused the rest of OPEC to fall in line... at least until 2000 when Iraq switched from the dollar to trading oil exclusively in euros.

In other words, there was an artificially-maintained relatio

Re:What are you talking about?

[RexRhino (769423)]

Okay, so our dollars can be spent on other country's goods, too.

No, I didn't say that, you just made that up completly off the top of your head. U.S. dollars are the official currency of the U.S., and are only good for trading for U.S. goods (or trading the currency with other people who want to purchase U.S. goods).

Now we can't buy foreign goods with our dollars? But didn't you just say we are sending them our dollars?

We purchase their goods with U.S. dollars, which goes into an account at a U.S. bank, which they can then spend on U.S. goods... or trade that currency for other currencies in countries where they want to purchase something.

But they can't use that U.S. currency to purchase things in France, or to purchase things in the UK, or to purchase things in Japan, unless they find a bank that will be willing to trade them a corresponding amount of those currencies... and to do that, there have to be people in France, or the UK, or Japan, who want to buy U.S. goods and so are willing to trade their own currency for U.S. dollars.

There is no gold standard... The dollar isn't backed by any commodity. The only value that the U.S. dollar has is that it can be used to purchase U.S. goods. For every dollar the U.S. spends on foreign goods, those foreign traders need to spend a dollar on U.S. goods (or on U.S. stocks or bonds or property).

I don't think you have any idea how international trade actually works.

This from someone who thinks the U.S. is still on the gold standard and wants to emulate the trade policies of Cuba.

Government bonds are to blame.

[rleibman (622895)]

And with what money shall the US consume if it does not manufacture anything to sell for profit? Technology was the last real growth manufacturing field. Without turning one thing into another, to sell for profit, there is no more real consumption as rather than generating money, you are just recycling money. And then, when you buy foreign made goods, that recycled money leaves the country, leaving you with less to purchase with. It is an entropic cycle, and will eventually fail.

When that money leaves th

Why?

[FatSean (18753)]

Why is it in their best interest to send money through the USA when we don't make much of what they want to buy, and we can't afford to buy what they sell?

Re:

[Marxist Hacker 42 (638312)]

What do you mean with that, I thought the only way to have a trade deficit was to buy more from abroad than locally. So if we have a trade deficit it doesn't seem like we are having a problem affording stuff.

Short term vs long term viewpoint. If we have a trade deficit today- and it's large enough- it means that comparative advantage rules have broken down, and that the nation that no longer produces ANYTHING will start losing high-paying manufacturing jobs (gee, kind of like what we've been doing for 40

Re:

[aldousd666 (640240)]

so you're saying that if someone loses their high paying manufacturing job, then they can't go do something else ever? not even 20 years from now? It's a local hiccup to lose a local industry to foreign competition, it doesn't make the next generation (next 4 year class of college students even) of workers immune to finding jobs. It's those high paying jobs anyway that make American companies unable to compete with foreign companies who don't pay them as much. So you're basically saying that we should som

Re:Why?

[Marxist Hacker 42 (638312)]

so you're saying that if someone loses their high paying manufacturing job, then they can't go do something else ever?

No, I'm saying that the options to high paying manufacturing jobs pay less than a living wage.

not even 20 years from now?

Unless something comes along that pays a living wage, not even 20 years from now. The race for cheap labor is a race to the bottom, not to the top.

It's a local hiccup to lose a local industry to foreign competition, it doesn't make the next generation (next 4 year class of college students even) of workers immune to finding jobs.

It just means that the next generation only has burger flipping available- because nobody can afford anything else.

It's those high paying jobs anyway that make American companies unable to compete with foreign companies who don't pay them as much.

And we want to compete with them exactly why? Why not just lock them out of our market so that we don't have to compete with them?

So you're basically saying that we should somehow tell the other countries that they have to be fair and pay them as much as we'd like to make, because.. it's only fair that way... right?

No, I'm saying that if they want to sell goods here, then they have to pay equal to American wages. If they don't want to pay equal to American wages, then I see NO reason why we should allow their imports AT ALL.

I don't think they'll buy it. And you will be left behind whining about how life isn't fair, while the people who adapt will be moving on buying more plasma screen tv's they shouldn't be able to afford.

At least until China realizes that all they're getting for those plasma screens are IOUs that will never be paid off. I don't see any reason why we can't just sink the Chinese ships trying to cross our borders, and make the plasma screens here. But hey- if you like selling out your nationality for cheap labor, so be it. There's a name for that: treason. And someday, patriots like me will be handing out the proper punishment for that crime.

Re:

[timster (32400)]

Thanks for showing your open hate at the end there, MH42. Nice to know that marxists are still empty violent rebel types.

Your economic theory is interesting but baseless. If you get out a map you can draw arbitrary lines on it and make any silly economic point that you please. Suppose you draw a line around downtown San Francisco, and you notice that goods and services come in while only trash goes out. You haven't made an economic point about downtown San Francisco; you've just found where some rich pe

Re:

[aldousd666 (640240)]

you don't have a 'right to a job' you have to right to apply for a job. if nobody wants to pay your for your services, learn some new services. nobody 'took our jobs away' they simply outperformed us for a lower price. I'm not talking about quality necessarily, that's another issue, and it varies as well. People go to work and get paid because someone feels the need for their services, and that it's worth forking out the cash for said service instead of, for example, doing it themselves. You don't get a pa

Re:

[Marxist Hacker 42 (638312)]

No, it does NOT mean comparative advantage rules have broken down. Believe it or not, us buying more abroad just means that our money is worth more to foreigners than the objects they are selling, and the objects we are buying are worth more to us than the money being shelled out. That is all.

That's all if you are only thinking in the short term. But in the long term, this destroys our manufacturing industry to the point that we can't afford to keep paying Americans a high enough wage to have houses, let

Re:

[Colin Smith (2679)]

http://www.iribnews.ir/Full_en.asp?news_id=234177& n=33 [iribnews.ir]
 

Re:How long

[Bluesman (104513)]

They can't if they care about their economy.

But what if they don't care? The Chinese don't have a history of being enamored of the global free market. They might be willing to cut of their nose to spite their face, especially if their new middle class gets too uppity for the party's taste.

Our massive debt that the Chinese control means that they could sink their economy and ours with a single move. It's like a financial nuclear bomb, only the Chinese have the only trigger.

I'm all for globalism, but the massive amount of debt the U.S. government is creating isn't going to go away, and there will be consequences eventually.

Re:

[daveschroeder (516195)]

Looks like you have no idea what a trade deficit is. Here's some help [google.com].

We don't "owe" anyone that money. That's the imbalance between what we export vs. what we import, i.e., we import that much more. A trade defecit - and some would argue any large trade imbalance - is unhealthy for the economy as a whole.

Re:How long

[BrianRoach (614397)]

You see this all the time now with Chinese produced goods. They copy whatever it is they were manufacturing for American company X, then produce it for themselves and ship it into the US. Basically, all they need is someone in the US to handle sales and distribution (Walmart, for example).

- Roach

Re:How long

[archen (447353)]

I've actually had discussions on this sort of topic and I didn't realize the implications until later. It's almost impossible to get an electronic system manufactured in the U.S. now because we've shipped all of our capabilities overseas - mainly to China. I was having a discussion with a friend about a product which he was talking about producing - a one time thing, for himself. I mentioned that it was a pretty cool idea and that he should consider making such a product commercially and selling it. He said that it wasn't worth the effort. You need to produce the product, that means using a Chinese manufacturer. They will copy it and undercut you to hell and back, whether you have a patent or not. So really there is no reason to think up new products because in the end China will end up screwing you.

There is an amazing amount of gadgetry out there now days, but I wonder how many products never come to life because people (in the U.S.) understand that there is no way to really make any money on it.

Re:

[stevesliva (648202)]

When a country exports all of it's facilities, manufacturing, and infastructure overseas, how long before that countries trading partners realize that they can cut the country out of the loop entirely?

Sure they could, but they need customers. The loop that the US needs to be worried about getting cut out of is the profit loop. Sure there are lots of manufacturers in China and the rest of Asia, but they're in killer competition to underbid each other to manufacture stuff designed in the US or Japan and

Re:How long

[Ohreally_factor (593551)]

they need better brands and more of a retail channel. They'll be looking to acquire that.

coughcoughLenovocough

The main problem for the U.S. is that wages are relatively high, while they are low in these rapidly developing countries. And we're apparently on a generally downward spiral while they're on a generally upward spiral. The competition you mention is going to keep wages in these countries from rising quickly, so the "floor" is going to be lower, and workers in the U.S. are going to be in for some long term pain.

There are a lot of other factors involved, such as the lack of effective regulation (for product safety, working conditions, environmental issues, etc.) that play into this in complicated ways. But the bottom line is that we're in for some belt tightening here in the U.S., barring some major technological breakthrough.

Re:How long

[Carewolf (581105)]

Wages are even higher in Europe, yet according to the story you import more electronics from Europe than you produce yourself.

Re:

[RexRhino (769423)]

Wages are even higher in Europe, yet according to the story you import more electronics from Europe than you produce yourself.

WRONG! According to the article, the U.S. imports more tech products from Europe than it does from Canada and Mexico (i.e. North America). It doesn't say anything about more tech goods being produced in Europe than the U.S..

The U.S. actually maintains a trade surplus in tech good with Europe, to the tune of $13 billion... Europeans buy far more U.S. tech products than the U.S. buys European tech products. http://www.aeanet.org/PressRoom/prac_TCS_2007.asp [aeanet.org]

China, and their cheap consumer electronics is where

Re:

[RexRhino (769423)]

LOL, and many of those "US" products the Europeans are buying were produced in China.

None. Most of those tech products European are buying from the U.S. are software, biotech and pharmaceuticals, aerospace technology, industrial electronics and robotics, etc., things that China doesn't export.

China exports low cost consumer electronics, such as DVD players. That is because the cost of labor is the biggest single cost of consumer electronics. However, the cost of labor on a 787 is negligible, the cost of labor on an industrial CNC mill is negligible, the cost of labor on Adobe InDesign in n

Re:

[aldousd666 (640240)]

england seems to be doing alright. what do they export? deficit doesn't mean 'debt' in case those of you hadn't caught on yet. All it means is we import more than we export. It is not a disaster. It's not even necessarily bad.

Re:

[drsquare (530038)]

The British economy is almost entirely based on debt. It's not a good example to follow. We have millions of people employed by the government doing non-jobs, their wages paid by private finance-initiatives, which means jobs otherwise done by the public sector are done by the private sector, at much higher cost and much less efficiency, but it looks good on the books as the cost can be deferred for twenty years, by which time all the current politicians will have retired and won't have to deal with it. Mill

If this keeps on...

[dtjohnson (102237)]

...we'll end up living in huts made of logs and sod, driving pushcarts full of firewood, and eating soybeans. Seriously, doesn't 'trade' mean an 'exchange' of goods and services? Obviously, the exchange is not happening, just a transfer of currency.

It's true

[solevita (967690)]

Too many of the US' imports are coming from abroad.

We do it to ourselves

[DukeLinux (644551)]

I vote in EVERY election in my precint. I vote against ALL incumbants and against any additional spending. I am doing my part. I think when the dollar finally collapses people will get a clue that deindustrializing along with de-educating our kids was a really bad idea. I am not sure if our Government fully appreciates the impact of a bunch of pissed-off gun-owning "peasants." Shrub never read the history around Viet Nam and wonderfully repeated it. I bet he knows even less about European history...regarding uprisings, inserection and revolutions, etc.

Well, yeah....

[FooAtWFU (699187)]

It shouldn't be the least bit surprising to anyone that we import our electronics from overseas. It's also not surprising or even necessarily bad that we have a trade deficit. We're the rich country, and we're spending money on buying stuff. And it's not like global trade is a zero-sum game; we remain pretty darned capable of generating wealth ourselves, and indeed can do so far more effectively than manufacturing a bunch of cheap electronic parts.

Yay, so the markets are hiccuping because people didn't understand the risk associated with the debt securities they were buying. let's get scared about the trade deficit by posting scary-looking numbers when most people don't understand any of the concepts behind them, oooooooooooooooooh. scary! :P

economics on Slashdot

[syrinx (106469)]

I can tell that this will be a useful discussion. Once I'm finished reading the insightful and intelligent posts here, I think I'll go to the blog of The Economist or the Wall Street Journal and ask them about the latest Ubuntu release!

Maybe there's a reason ...

[LaughingCoder (914424)]

Tell me another country whose government routinely punishes their most successful companies (AT&T, IBM, Microsoft) while at the same time spending billions to prop up failing companies (Chrysler). This is backwards behavior that naturally leads to trade deficits. What surprises me is how the US government does not smarten up and notice everyone else laughing at us.

Economics and slashdot

[cartman (18204)]

I read through a few of the posts here, and I think some of the posters are not experts in econ despite their claims.

Although I'm not an economist, I am interested in the topic and have read some books about it.

Some facts accepted by all trade economists:

1. When the United States has a "trade deficit", it means that foreigners are buying US bonds (typically treasuries), or are increasing their reserves of dollars. (If you count selling bonds and sending currency as exports then the trade deficit is always 0).

2.At some point in the future, foreigners will want their money back or will want to spend their dollar reserves, at which point the US will have to export more than it imports. Then the trade deficit will run the other way. There is no chance of other countries "cutting out" the US, because that would mean they sent us products and lent us money while getting nothing in return.

3. The trade deficit increases the standard of living for Americans in the short term. It means that we can buy more things at Wal-Mart and other places than we otherwise could. It does not affect our overall unemployment rate. The only problem with the trade deficit is that it can't be extended indefinitely, which means that at some point we will have to export more than we import, which will be unfortunate for us.

4. Although China accounts for a larger share of the trade deficit than any other single country, it accounts for much less than Europe and Japan combined.

5. The reason Europe and Japan export things to the US is because they want to pay for imports from the US, either now or in the future.

6. The trade deficit by itself is not necessarily a problem. The only problem is if there's a "hard landing" which means that Europe, Japan, and China demand their money back more quickly than the US economy can adjust, which would harm all parties.

Trade Deficit and Currency

[Ignatius (6850)]

As a European, it I amazes me how many slashdotters seem to live in a complete state of denial, even going as far as to claim that "Trade Defcit" is an artificial and meaningless term - it is not! Unlike many other figures like the official GNP (which includes positions like "good will" and and other magic) or the official (hedonic) inflation rate, or the unemployment rate (determined by a telephone poll), the trade deficit is a very solid and easy to understand thing: the value of (real, tangible) goods and servicies going in minus the value of products going out.

If you buy more stuff than you sell, then you have a net flow of dollars out. Whoever receives these dollars can do one of 3 things: (1) use the dollars (directly or indirectly) to buy US products, (2) lend the dollars back to the US (US bonds, treasury bills), expecting to get even more dollars back, or (3) buy stuff in the US (stocks, equity, real estate), again in the hope to make even more dollars from his investment. Since, for one reason or another, the US economy fails to offer enough products anyone outside the US wants to buy (1) (hence the trade deficit), we're taking about debt (2) and sell-out (3).

A "normal" country wouldn't be able to do this for very long; as he would quickly (a) have its currecy devalued (if you have nothing to sell, no one outside needs your currency), (b) run out lenders (most countries dont have the luxury to indept itself abroad in their own currency to begin with) and (c) local assets to sell. Depending on whether you do or do not fire up the printing press you either end up in bancruptcy or hyperinflation.

A super power like the US which is able to strongarm or otherwise convince the producers of some key commodities to trade exclusively in their own currency, can get away with it considerably longer as their are alway products to buy for dollars (most prominently oil) even if those are not made in the USA by US labour. This gives the dollar the liquidity which is necessary so that it even makes sense to lend back dollars to the US (instead of demanding real goods right away).

It is even more helpful, if you can convice some producers of said key commodities (as e.g. Saudi Arabia), to set a good example by putting most of the money into US treasury bills and US assets (petro dollar recycling), as this postpones inflation and the devaluation of the dollar which in turn allows to keep the interest rates in a sane range as long as those bills are kept in the vault and are constantly renewed.

Of course, not even the US can live on credit alone, eventually the lenders will want something "tangible", and if you cannot or don't want to provide goods, at least you can provide them "assets". Of course, there is only so much you can sell, so the trick is to invent more things to sell (e.g. "intellecual property") and to inflate the prices of existing investments. Since the inflation is in assets and not in consumer goods, this is not called inflation but a "boom" (after all, inverstors want prices to rise) before and a "bubble" after people realize that a high price dose not imply a sound and profitable investment (as happend in the dot-com crash and is happening right now in the real estate and mortage sector).

You can, as some in this thread do, consider this a good thing for the US, after all, it basically means converting paper into Mercedes' and BMWs, and they would be correct if this games can be played infinitely - if you happen to be in the group that actually profits (that is, if you work in or close to the finance sector - if you're a production worker, well, too bad - maybe you can get a job as buttler or bodguard by those with better luck). Then it would make sense to deindutrialize your country and neither do you need an efficient education system as the rest of the world is supplying you with consumer goods basically for free.

It won't work infinitely, though. The non-US world sits on an ever increasing pile of trillions of dollars in US-dept and overvalued assets. Ever

Re:

[saleenS281 (859657)]

Right, except your company sells things to consumers, and the grocery store buys things from it's distributor. Who again are we selling to? The martians? We're at a deficit on all fronts... a country cannot survive as a consumerist entity, sorry.

Re:

[zoney_ie (740061)]

You're missing the point - it's more like if you are paid less by your employer (and anyone else) than you spend at the grocery store, on accommodation, everything else. Eventually, even if you're living on credit, you'll not be able to sustain such a deficit.

Re:Lots of trade defecits!

[Magnus Pym (237274)]

If you abstract out enough, all you need is to eat, shit and sleep.

In practice, things are not that simple.

Have you any idea how much the dollar is falling w.r.t. international currencies? The pound is more than 2 dollars now. Do you know what the implications of this are?

Hint: In the short term, a weak dollar might help local manufacturers, but it will devastate the middle class because inflation will follow shortly.

Magnus

Re:Lots of trade defecits!

[Ajehals (947354)]

Minor problem with that theory.

Firstly the Us sends them dollars, they need dollars to buy oil, so they sell the US things in exchange for dollars which they exchange for oil. The oil producers then have lots of Dollars and are happy, they buy things from all over the world in dollars (because everyone needs dollars for oil).

The problem arises when the dollar becomes less stable and loses value, at that point the oil producers either take a hit and make less profits, increase the price of oil (which means people want dollars even more badly and may increase the dollars value thus solving the problem in the short term, but pushes up process of anything that needs transporting or oil in some other way...) or they can switch to a more stable currency.

If they switch to a more stable currency then the dollar sinks, the global economy takes a huge hit, but when the dust settles, the US is in a bad way because no one wants dollars anymore, as are all these countries that peg their currency to the dollar and whoever replaced the dollar as the currency of choice is sitting pretty.

People don't swap goods for useless paper, they swap goods for paper that they feel will get them the things that they need, the moment that stops that paper really does become worthless and no one will want it, bad news if you need to buy things from abroad because you don't have a manufacturing base anymore and no one wants to buy your services.

It isn't luck, it was *absolute genius*

[Colin Smith (2679)]

The US declared bankruptcy on the 15th of August 1971.

Nobody noticed or seemed to care. Which I have to admit I find a touch odd. But... at the same time, in 1972 and 1973 they managed to persuade the House of Saudi to denominate oil in US dollars so everyone had to buy dollars to buy oil. Perhaps you'll start to understand the close relationship between the US and Saudi now.

This genius has allowed the US to export it's inflation to the rest of the world for decades. It may have been desperation or genius, but whoever it was that thought it up should be given the highest medal by the US government and people. It's given the US a truly massive advantage over all of the other countries.

Of course, 40 years later, everyone is starting to wake up to the importance of currency, and the oil producers are starting to switch away from the US dollar as it's value dwindles.

"A nation-state taxes its own citizens, while an empire taxes other nation-states."
And inflation is just another form of taxation.

Brilliant.
 

Re:

[lawpoop (604919)]

By definition of trade, something is given away and something is received in exchange.

That would be true if, for example, the US and China were trading material goods in exchange for material goods, but international trade is the exchange of material goods for paper money. It's starting to appear to me that this fractional reserve currency is basically a shell game, or musical chairs, and every so often the system crashes, with winners and losers. So it may actually be a problem if you have an actual material trade imbalance in order to play a shell game. And China is starting to look like

Re:

[spicate (667270)]

Also, trade only occurs because that which is received is valued more than that which is given away in exchange. Thus, both parties *profit* from every instance of trade, at the moment of trade.

By your logic, no one ever is on the losing end of a trade. Reality is full of counter examples. You're making the implicit assumption that people (or businesses) are perfectly rational actors with complete knowledge. They aren't - see the last 50 years or research in the social sciences.

There is no deficit whatsoever that occurs from any single instance of trade, even if that trade involves promises to repay at a future time.

Just to give you one example of how this is wrong... Material goods may depreciate at a different (faster?) rate than currency does. So if I give you cash for a car, that car will be worth at lot less in 5 years than the

Re:No such thing as a Trade Deficit

[TubeSteak (669689)]

By definition of trade, something is given away and something is received in exchange. There is no deficit whatsoever that occurs from any single instance of trade, even if that trade involves promises to repay at a future time.
...
Talk of "trade deficits" is political manipulation designed to bamboozle the uninformed. Anyone who believes "deficits" result from trade is as gullible as the Emperor's New Clothes.

Do you even understand what's being discussed here? TFA is saying that in the electronics sector, we are buying more than we are selling. It has nothing to do with 1-to-1 business transactions.

My country buys 10 billion [currency] worth of widgets from your country
Your country buys 5 billion [currency] worth of widgets from mine
My country has a trade deficit of 5 billion [currency] in the widget sector.

It's imports vs exports.
When imports do not = exports, you have an imbalance.

For your nonsensical post to be correct, we would have to be buying and selling widgets in equal quantities. Hint: we aren't.

I really can't understand how anyone moderated you up.
This stuff isn't that hard.

Re:

[Bluesman (104513)]

You are completely right as far as your economic analysis.

But what's truly worrying is not that we have a trade deficit, which isn't necessarily bad. What bothers people are the political implications of other countries owning massive quantities of the U.S. public debt. The real cause of this is the U.S. government inflating its currency to pay for expensive political projects and favors (like, say, wars, subsidies, social security, and medicare prescriptions); the trade deficit only exacerbates the probl

Re:

[aldousd666 (640240)]

you're an idiot. If we only bought american goods, then we'd inflate our local prices, and foreign companies would kick the crap out of us abroad, and we wouldn't have anyone able to compete. Then instead of losing SOME money to them, we'd have whole companies go out of business. You weren't paying attention in economics class where you. It might sound nice to say 'buy american' but if we really did that, and boycott foreign stuff, you'd drive the price on american shit up so much there would be no way in h

Re:

[Marxist Hacker 42 (638312)]

If we only bought american goods, then we'd inflate our local prices,

Thus increasing the wages of American Workers, which would in turn allow us to afford those higher local prices, and encourage production of goods here at home to keep us safe from foreign wars and governments.

and foreign companies would kick the crap out of us abroad,

Only if you're stupid enough to tie your business to a foreign market instead of creating goods for your own nation's people ONLY. We've got 300 million people who, to

Re:

[tibike77 (611880)]

First off... did you have a brainfart, or are you actually advocating USA ISOLATIONISM, on all fronts, economic, political and military ?!?
You know it can never work nowadays, do you ?
Not that I wouldn't just love to see the USA shut the hell up already and keep its nose out of other people's bussiness, work out internal issues first... but that will and could never happend.

Second... fiat currency is insignificant compared to the "virtual money" in circulation nowadays, at least 90% of today's "money" doesn

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[spun (1352)]

It might sound nice to say 'buy american' but if we really did that, and boycott foreign stuff, you'd drive the price on american shit up so much there would be no way in hell anyone but americans would buy american,

You were the one not paying attention in economics class. If the price on American goods goes up, more American companies will enter the market to create those goods, bringing the price back down.