Why Does the US Always Run a Trade Deficit? (newyorkfed.org) 243
The U.S. trade deficit persists due to fundamental macroeconomic imbalances rather than just export shortfalls, according to Federal Reserve Bank of New York economist Thomas Klitgaard. His analysis shows the deficit reflects a persistent gap between domestic saving and investment spending, with the U.S. borrowing from foreign sources to fund domestic investment when savings fall short.
This macroeconomic reality means targeting specific trade categories won't resolve the overall imbalance -- even when the petroleum deficit disappeared by 2019 due to increased domestic production, the total trade deficit grew to $441 billion, consistent with a widening saving gap.
Bureau of Economic Analysis data reveals household saving has remained below pre-pandemic levels as consumers spend down accumulated savings from 2020-21, while business saving has remained relatively stable. Reducing the deficit would require significant macroeconomic adjustments, including higher domestic saving or reduced investment spending, which studies indicate would likely cause economic pain as demonstrated during the 2008 recession.
This macroeconomic reality means targeting specific trade categories won't resolve the overall imbalance -- even when the petroleum deficit disappeared by 2019 due to increased domestic production, the total trade deficit grew to $441 billion, consistent with a widening saving gap.
Bureau of Economic Analysis data reveals household saving has remained below pre-pandemic levels as consumers spend down accumulated savings from 2020-21, while business saving has remained relatively stable. Reducing the deficit would require significant macroeconomic adjustments, including higher domestic saving or reduced investment spending, which studies indicate would likely cause economic pain as demonstrated during the 2008 recession.
Trade imbalances are not necesarily bad (Score:5, Insightful)
Trade imbalances usually mean we get more stuff for cheap, raising our standard of living. The more they buy from us, the better our industries do too.
We were selling shit tons of services. All these blanket tariffs have done is hurt everybody, but ourselves especially.
Fuck Trump.
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And easier to get in addition.
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Re:Trade imbalances are not necesarily bad (Score:5, Insightful)
Low quality consumer goods is entirely a decision in aggregate of the american consumer. Chinese companies produce goods to any quality demanded by their customers. Cutting corners and reducing costs to the bare minimum is something they learned from us. Even if we managed to miraculously bring all consumer manufacturing back to the US, we'd still have low-quality goods but at higher prices.
If you want higher quality from your chinese manufacturers, you can get it. And it costs more too, just like it would here.
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I remember when "Made in Japan" meant that the product was crap. Then they got better. Some Japanese companies such as Sony returned to crap in pursuit of profits. China has improved a lot, but in their case a lot of manufacturing is done by contract and you get what you pay for.
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and of better quality.
You owe me a new keyboard.
That's the dumbest shit I have ever heard.
China is fully capable of making high quality shit. The problem, is that their high quality shit isn't any cheaper than anyone else's.
The less expensive Chinese products you purchase are, in fact, pieces of shit.
I've burned through hundreds of cheap Chinese computer/electronics doodads.
Re:Trade imbalances are not necesarily bad (Score:4)
Re: Trade imbalances are not necesarily bad (Score:3)
Claiming that factories exclusively run on robots is a scare tactic to keep jobs from coming back.
Not exclusively robots, but enough. The first chart in this American Enterprise Institute page tells the tale: https://www.aei.org/carpe-diem... [aei.org] You can't strawman away 45 years of increasing manufacturing output accompanied by declining manufacturing employment, nor can you Great Pumpkin the jobs back to 1980 levels.
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What is your source on that being the "most automated" car manufacturing plant in the US?
Spartanburg BMW Plant:
https://www.youtube.com/watch?... [youtube.com]
Tesla:
https://www.youtube.com/watch?... [youtube.com]
Now, maybe they're avoiding showing the robots in the BMW plant, but I'm seeing a LOT more automation beyond cranes for moving cars in production around in the Tesla video.
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From what I could find Tesla Fremont employs somewhere in the range of 20k people and produces from what I could glean about 500-600k vehicles per year (32.5 per worker), Spartanburg about 11,000 workers and 450k vehicles per year (41 per worker) so depends how you look at it, of course I don't think we would find breakdowns on who is admin versus actually assembling so I think it's fair to say both factories are very automated and yet both still need literally thousands of people to operate.
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You're seriously rhetorically asking "why does a car manufacturing plant need a parking lot to place the cars it produces on" and expects it to be some kind of "gotcha".
And that is the absolutely only argument you have; that you can't think far enough to comprehend the need for space to place produced vehicles on.
I've been disappointed by a lot of commenters in my day, but you take the cake.
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A trade balance requires an equal population (Score:5, Informative)
The trade balance is a stupid concept from our days of competing with Japan, who had a large economy and directly competed with us. They could theoretically make sense against a large economy, but never against the majority of countries. Even if you think a trade imbalance is bad, the way Trump does, there's a smart way of correcting that and how Trump handled it was lazy and sloppy.
I don't personally think trade imbalance with an equivalent country is bad, but if I did, I would first gather better metrics and make it per capita...and then...focus on making American products more competitive, not making foreign ones more expensive. Countering other nation's tariffs?...that's actually smart, to Trump's credit. Had he stopped there, I'd celebrate his efforts...but throwing in extra about trade imbalances, calculated by total trade is just abysmally stupid...both in how he computed it, but more importantly, to not factor in that some economies are just more specialized than ours, like New Zealand or Ethiopia. Most economists would recommend subsidies over tariffs...they make our goods more appealing to everyone, not just American customers.
Re:A trade balance requires an equal population (Score:5, Insightful)
I don't personally think trade imbalance with an equivalent country is bad, but if I did, I would first gather better metrics and make it per capita.
Thank you. As a Canadian I find it aggravating that Trump is so obsessed with our trade deficit. USA has around 8 times the population of Canada. Why would we buy the same amount of goods from each other?
You can crunch the the numbers for yourself, using US Government data. Annually, Canadians buy $8,735 per capita in U.S. goods. Americans buy $1,213 per capita in Canadian goods. Yet Trump has the impudence to refer to this as "subsidizing Canada".
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You just tried to wrap the economy into a zero-sum equation. It is not. Re-evaluate and come back.
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A permanent trade deficit that requires more and more debt to be printed and sold for the future generations supposedly to pay back (will never happen, the default and inflation will take care of that) is due to a population consuming more than it produces, full stop, period.
You're conflating the national debt and trade deficit which are two completely different things.
The rest of your post isnt much better. You suggest there isnt enough wealth for half the country to be on government medical insurance when the rest of the first world can afford to have their entire population.
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Even if the US had free healthcare, and full social protection in the form of welfare and food stamps, for every citizen, and provided free higher education for everyone, it wouldn't spend even half of what the economy generates, much less *more* than it generates.
How do I know? Nations which generate less money per capita do this, and it doesn't cost more than their economy generates.
There is no need to tax even remotely as high as you suggest to afford infrastructure, health care, education and social ser
Re:Trade imbalances are not necesarily bad (Score:5, Interesting)
Tariffs are solution 2., devaluating the surplus money by siphoning it off as taxes on imports.
Re:Trade imbalances are not necesarily bad (Score:5, Informative)
The trade deficit is also a lot smaller than Trump says. He only measures GOODS trades, but if you include services, suddenly the picture can change substantially. The US bought more "stuff" from say, the EU, but if you count services, the EU bought more stuff, so the US has a trade surplus with the EU.
Economies grow and evolve. You generally start with a resource based economy where you dig it out of the ground or something then sell it. You then take that money to process that ground stuff into higher value resources and sell that. The next evolution is to grow into a manufacturing economy where you're making labor intensive goods - that is, goods that require a lot of labor to produce like toys, clothes, and other things. This grows the economy until you can switch to a capital intensive manufacturing where you make high value stuff that requires a lot of capital to make (and usually a lot less labor). Think heavy industries like vehicle manufacture. The final stage is generally a services based economy where you're selling services to the world stuff that can be made with very little rssources. Think stuff like software. movies, books, music, etc. This also includes things like tourism, and education.
Of course, Trump decided to decimate tourism and education with his policies, thus destroying some of the largest services the US economy has. Foreign studens come to the US to study, and they're paying higher fees for the privilege of studying their chosen subjects.
And trade deficits aren't bad at all. You sell your time to your employer - but do you buy you're employer's products or services at the same amount? Chances are you don't so your employer has a trade deficit with you. Maybe they should enact a tariff and reduce your pay to compensate?
Likewise, your supermarket has a trade surplus with you, since you buy more stuff from then than they do from you.
That's how meaningless a number it really is.
The US has trade deficits because they're the world's richest country and they're basically spending money buying stuff from all around the world. Some are goods, some are services, And the US is good at making those things into higher value products and services which it serves to the world.
One of the big reasons for the US Dollar being a reserve currency is because the US prints money and spreads it out through the world through its spending., Other countries need US dollars to do trade with others as well, and the US has made the US dollar relatively available to everyone so everyone uses it.
Trump wants to bring the economy back to the 1950s where a lot of it was labor intensive, which makes zero sense. Sure in the 1950s it means you could get good money working at a factory with barely any schooling, but as the economy advances, the base level of education goes up to produce those higher value goods and services
Re: Trade imbalances are not necesarily bad (Score:2)
Re:Trade imbalances are not necesarily bad (Score:5, Insightful)
Well... that and world pirates the stuff made in the US. Many countries aren't paying for our music, TV, movies, games, and software... they're just stealing it.
False. Theft is when you deprive someone of something, which isn't happening here. Those countries where nobody pays for our media wouldn't be paying if they weren't consuming that media, so nothing is lost. But something is gained: advertising, publicity, dissemination of American views and attitudes around the world. If the nations ever get to the point where people can afford to pay for that media, they will also have the legal framework to allow pursuing copyright claims. They won't be able to grow their economy to that point without it.
Downside of basing your economy on "soft" goods instead of physical items, I guess.
That would be a downside if it were true, but the USA still exports a lot of physical items. We're a world-leading exporter of food, only China exports more heavy equipment than we do (and that is a fairly recent development and we didn't decrease those exports much, they increased theirs) and of course we're also the world's largest arms merchant. On the other hand, Cheeto Benito is in the process of making it true as we speak...
Re:Trade imbalances are not necesarily bad (Score:5, Interesting)
We're a world-leading exporter of food ...
Noting that Trump's first trade war with China pushed them into switching from getting most of their soybeans from the U.S. to Brazil; they haven't switched back and are now getting more soybeans from Brazil, instead of the U.S. due the current trade war. Looks like they'll be doing this for other food stuffs too...
Google: China soybeans US Brazil [google.com]
Re:Trade imbalances are not necesarily bad (Score:5, Interesting)
Same thing happened with Washington state's apple farmers - they largely lost the Chinese market during Trump term #1, and it hasn't come back.
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> The original owner no longer owns the sole right to copy his work--he is deprived of it
That's simply incorrect. The owner is the sole owner as enforced by the country that granted it. They are deprived of nothing. If the US owner copied it from another country, the same holds true. Please don't get lost in your own ideological thinking.
Re:Trade imbalances are not necesarily bad (Score:4, Interesting)
You have violated their copyright
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That's not an export issue, though. As long as DRM remains in use, piracy will remain the only serious option for getting conveniently-playable media, whether you're inside or outside the US. The US has lots of people who don't want to make needless sacrifices when it comes to quality and convenience.
USD world's reserve currency ... (Score:5, Interesting)
The USD is the world reserve currency. It basically impossible to be the reserve currency and not run deficits. If the US wants to get rid of its deficits, it needs to get rid of it's reserve currency status. But good luck being able to fund its wars and military industrial complex.
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Still will happen. The US has long since guareded that status with extreme effort (That invasion in Irak? Irak switched to the Euro for its oil trades ...), but I think Trump is wayyy to dumb to even undertsand the idea.
With all that instability the dumb orange "fascist child" is doing, the USD is done for. And it is not comming back anytime soon. Maybe next century. Or not.
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That invasion in Irak? Irak switched to the Euro for its oil trades
And somebody ended up swinging from the gallows for that effort.
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the USD is done for.
You really are an idiot. And you claim to teach people? Fucking horrifying.
Re:USD world's reserve currency ... (Score:5, Interesting)
And once Trump leaves office, there is no getting back what we once had. The dollar gained its position in world affairs thanks to the U.S. coming out of WWII largely unscathed as the worlds mightiest industrial empire and the world indebted to the U.S. Today we owe money to everyone and we are no longer the world's leading industrial giant. The increasing interest rate we are having to pay to sell Treasuries is a strong indicator of the how the world sees the dollar as a currency in the future.
Increased Domestic Savings– (Score:2)
means less purchasing; i.e. slowing of consumer economy?
Whoops All Arrowheads (Score:3)
We could bring back the middle class (Score:5, Insightful)
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Its not the owners fault.
Its the monetary system.
Look up the Cantillon effect.
Those closest to the money printer (anyone with assets, be it stocks, real estate, land, etc...) benefit the most.
Those without assets, keep getting poorer.
Those in the middle need a second job as stock pickers and financial traders to just keep up with the devaluation of the dollar from monetary supply inflation.
The S&P500 has barely kept up with the devaluation of the dollar except for a very few select corporations. MAG7 ma
Re:We could bring back the middle class (Score:5, Insightful)
Re:We could bring back the middle class (Score:5, Insightful)
What? No offence but everything you've said couldnt be more wrong. You want money in the hands of people who will spend it, thus generating economic activity, as opposed to those who will invest it in a bloated stock market where the money more or less sits stagnate accruing interest. Most American companies and affluent Americans are sitting on piles of money that are doing zero good for the nation. Money spent is economic activity generated that makes us all richer.
Take a look at third world nations. Their problem isnt that they don't have enough billionaires, it's that they dont have a large enough consumer class. Why would a wealthy person or company invest money into an economy with such low amounts of economic activity? They wouldnt. If there was a large consumer class that might actually buy goods and services though? Now you've got a place where people and companies with money will invest.
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Yup. First world wealth is based on a strong middle class because they spend a high percentage of their money thus generating economic activity. Want to make things better for the country as a whole? Do what you can to expand the middle class. It's not only morally superior, it is also economically superior.
All increased wealth concentration does is take us closer and closer back to the time when the West was mostly comprised of poor people and a handful of wealthy elite.
Re:We could bring back the middle class (Score:5, Informative)
America became great post-WWII with the explosion of the middle class during a long period of higher social programs, infrastructure investment and high marginal tax rates. All the evidence in the world shows that a strong middle class is most important for a good economy and high taxes on the "rich" work very nicely in the environment.
Unfortunately, starting with Reagan the US reversed those policies. When will Americans realize that Reagan was a chief villain in the unraveling of the greatness of the country? He not only began the gutting of the middle class and enrichening of the rich, he deregulated to create the Rush Limbaugh's and Rupert Murdochs and he was a horrendous bigot that cheered the suffering and death of gays and kicked off the mental health crisis that the country cannot cope with today. Also, he was hated by mainstream Republicans of the time, although worshipped by the fake ones now.
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You want money in the hands of people who will spend it, thus generating economic activity, as opposed to those who will invest it in a bloated stock market where the money more or less sits stagnate accruing interest.
That's not how the stock market works, because every trade has two sides. When you buy, someone is selling. The money doesn't sit anywhere or earn interest, it goes to someone else's pocket. It's exactly what you want, excess money goes to someone that wants to spend it now in exchange for you holding a piece of paper some time. Whether its stock, or baseball cards or even crypto bullshit, any market has that function, the money doesn't go in, it is traded and traded and traded until someone holds it or spe
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Set that strawman up and knock it right down. Look at you go.
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You want money in the hands of people who will spend it
On cheap Chinese plastic stuff. And fentanyl.
Somehow, neither of these sound like 'wealth building' activities.
This is strongly conflicting with the messaging that we are supposed to buy the same cheap stuff but China will pay us tariffs.
And that fentanyl is a poison brown people are using to murder white people, not a recreational drug they pay for
Or that government doesn't know how to best spend money, people do..... but only special people apparently
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Take that to the extreme, and the conclusion is: the only thing factories should ever make, are more factories.
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"...and that makes the economy grow."
The economy is people buying swimming pools and big TVs, it's not people using capital to accumulate wealth.
In fact, what is this "efficient use of capital" metric? What constitutes inefficiency? Where are the losses that make the use inefficient?
"...if you were running the country and your goal was efficient use of capital..."
If I were running the country, my goal wouldn't be "efficient use of capital", it would be restoration of the middle class. Government expendit
Layman's terms (Score:2, Redundant)
Trade Deficits? (Score:3, Insightful)
Dear Mr. Thomas Klitgaard:
I understand that the subject of trade deficits is of interest to *You*. But to try and elevate this to a national concern is premature. The BIG problem is overspending by the Federal government. Once *that* gets solved, then maybe, maybe it'll be time to worry about trade deficits.
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Re:Trade Deficits? (Score:4)
Flipside of the coin on this is to raise revenue. If we want to fund services then we should collect revenue to fund said services. This concept that the only possible way to "balance the budget" is to cut spending is just wrong, you can just raise taxes. In fact based on recent events it seems like that is really the most acceptable option.
I mean we have an all Republican government and their current budget plan with cuts all over the place is still expected to grow the deficit $3T over 10 years. This is what they do every time so maybe you are being honest about general "overspending" but the politicians and media pitching it have been lying about their intentions. It's been a bad faith cudgel to use against Democrats and nothing more. It's not a principle position it's a values one, they just want to spend debt on their things.
I just also want to throw out my obligatory big thank you to the DOGE boys for in fact showing the government is quite efficient, that with motivated non-DC group given unprecedented access to nearly every budget system couldn't come up with one instance of fraud or criminal act. I personally at first held my tongue on that because like everyone else maybe they do find some big smoking guns but nope, just "we don't like this" cuts. In my opinion after this the whole "too much waste" argument is dead in the water.
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The conservatives won't change their mind but I do hope this whole exercise will lead to more folks simply not believing the words they say because they don't mean them, they're just lying about caring about the debt or the deficit. Just stop giving that argument any good faith because it is not being made in good faith. We don't have to buy into the WWE style of politics where we have to do kayfabe that Republicans give a damn about balancing anything.
We are just arguing about what to deficit spend on, n
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Dear Mr. Thomas Klitgaard: I understand that the subject of trade deficits is of interest to *You*. But to try and elevate this to a national concern is premature. The BIG problem is overspending by the Federal government. Once *that* gets solved, then maybe, maybe it'll be time to worry about trade deficits.
This is a common fallacy, though surprisingly I can't find a widely-accepted name for it. I call it the "one thing at a time" fallacy. In the case of individual humans it's valid to want to focus solving one problem before addressing another, but in large organizations it doesn't make sense. Some degree of focus is good, but large organizations not only can but must work to solve multiple problems at the same time, because their size means that they have too many problems to address them serially.
If bot
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The Government issues bonds. Those bonds are sold on the open market. Individual people may buy them, or the Federal Reserve might. If the Federal Reserve does, it may print that money, or it may not.
When the Federal Reserve is buying 100% of issued bonds, and no banks are borrowing from the Federal Reserve, then the government will effectively just be printing money to fund its deficit.
Trade deficits measure the wrong thing. (Score:5, Interesting)
The problem I see is that the way we measure trade deficits don't account for the flow of wealth due to the value of American intellectual property.
Consider, for example, that in the trade deficit metrics, China gets full credit for the $500-ish import cost of an Apple iPhone. That, despite the fact that most of that $500 winds up in the pockets of a California company rather than in China itself.
When you take into account the value of intellectual property around the world, it explains why some of the most valuable corporations to be created in the past 50 years are American, [substack.com] despite supposedly persistent trade deficits for the entire period of time. [wikipedia.org] Because we're surprisingly good at creating new intellectual property--thanks to a legal and cultural environment which encourages greater levels of risk-taking than does Europe or Asia.
So all this finger pointing over trade deficits, all the actions taken by the Trump Administration, all the hand-wringing over how the US is somehow being 'bled dry'--is all based on a faulty metric
And so long as we keep measuring the wrong thing, and talking about the wrong thing, we'll keep doing the wrong thing to fix the wrong problem.
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The problem I see is that the way we measure trade deficits don't account for the flow of wealth due to the value of American intellectual property.
Interesting idea, but I don't think it makes sense.
Consider, for example, that in the trade deficit metrics, China gets full credit for the $500-ish import cost of an Apple iPhone. That, despite the fact that most of that $500 winds up in the pockets of a California company rather than in China itself.
No... none of the money Apple pays to China for the manufacturing of the device goes into Apple's pockets. Let's suppose the iPhone costs $1000 and has a 40% profit margin (and assume that all cost is manufacturing). Apple sends $600 to China and gets a phone, which it then sells for $1000. If the phone is sold to an American, then from a trade deficit perspective it's just -$600 on the China/US balance of trade. If the phone is sold to a person in a fo
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"And so long as we keep measuring the wrong thing, and talking about the wrong thing, we'll keep doing the wrong thing to fix the wrong problem."
Let's not pretend the current administration is trying to fix problems. It's trying to cause them.
We don't have a problem measuring the wrong things or talking about the wrong things, we have a problem with malignant sociopathy.
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Dollars are modern gold (Score:2)
Dollars are modern gold. The US prints that gold and gets mined for it by foreigners throwing goods at them.
A trade deficit is a weird idea (Score:3)
Money's not very useful--you can only use the things you buy with it.
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No one runs a higher deficit than the wealthy, yet here we are wondering why the wealthiest country in the world has a trade deficit. It's almost as though people are stupid, like our president.
Because of capital inflow (Score:3)
Because the rest of the world wants to invest in the US much more than the other way around. This causes the dollar to appreciate making importing in the US cheaper and exporting from the US more expensive. Hence the trade deficit.
https://paulkrugman.substack.c... [substack.com]
Somewhat simplistic (Score:3)
The US is squandering its status as the reserve currency of the world, and it is not going to end well. At some point other countries that hold all those treasuries are going to cut their losses and the thing will implode if we don't get our shit together. Today is just another dead canary in the coal mine with 30 yr rates over 5 again.
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Do you know why the stock market dips when treasury rates go high?
Who the fuck moderated you up?
The risk is people believing we'll no longer pay out those sky high rates- i.e., default on them.
Hasn't ever happened, but there's a first for everything.
Two simple reasons (Score:2)
It's cheaper to make products overseas than in this country and people love buying Chinese-made* crap they don't need. Look at all the ads on here from Temu and Etsy, for example.
If you want to see the trade deficit go down people will need to stop buying stuff. Which of course runs contrary to everything we're told, so it won't happen.
* It's not only China, but Vietnam, Honduras, and others as well. But China is the most noteworthy. I know someone who works in the construction industry and they get the
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This ought to be understood as a *good thing* (Score:2)
It means you are able to persuade the rest of the world to invest in the US. It's why you have (had...?) the world's reserve currency, why you have had amazing wealth and productivity growth for an extended period, etc etc.
Because we are a military empire (Score:5, Interesting)
So the way our economic system works is we have the world's largest military, a military capable of fighting basically the entire world at the same time and without nukes. This isn't me making shit up it's literally the US military doctrine. We are set up so that we can fight our two biggest military opponents at the same time. For all intents and purposes that might as well be the entire planet.
From there we don't want to just start a war so what we do is is we get people to buy our debt in the form of bonds. We leverage military and soft power and all sorts of other nasty little backroom deals to encourage the purchase of our debt.
That makes the US dollar the world's de facto currency. If you've heard the word Petro dollar that's what it means.
This in turn means that the dollar is worth way way more than it probably should be. This means that the dollar can buy more goods than it probably should be able to.
So we pay a bit of interest on all that debt but in exchange for that interest we get literally trillions of dollars of imports for a fraction of their actual real economic value.
Everybody thinks about the fucking Simpsons merchandise and ignores all the steel and rare earth minerals and finished goods and wood and food and everything else that we import for, and I cannot emphasize this enough, a fraction of its actual value
The end result of all this is that we are effectively being paid military tribute to our empire. Your quality of life is therefore higher than it should be relative to the system of government and economy and our economic systems.
This of course creates a trade imbalance on paper because we're importing more goods than we are exporting. But that is by design because we are using the international import economy as a means of extracting tribute.
We could do this in a more obvious way but it would require a lot more military and it's higher risk so there's no good reason to do so.
Absolutely nothing about the US economy makes sense until you understand all this. And once you do and you see what that idiot in the White House is doing and realize he's breaking the fundamental system that maintains our entire economy well, you just pretend it's not happening because it's fucking terrifying.
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I'm just curious because you keep replying to the bot that is stealing my old comments and reposting them.
If you are any chance you could break character and explain why you're doing it? Hell even if you're not I would love to hear your theories or anyone else's about why the strange bot keeps taking my old comments and reposting them with small changes to make them kind of weirdly nasty.
It's the most bizarre thing I have ever seen anything do online before
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Real goods in exchange of green paper... (Score:2)
Simple as that...
Whole world delivers goods for some green papers that are losing value every year...
What is being actually measured? (Score:2)
What is being actually measured with a trade deficit? Mostly (from what I understand), this is the flow of physical goods. But this is far from the total picture. The US has a huge net inflow of money from things like digital services, financial services, royalties from patents, movies, Coca-Cola, Starbucks...
A sale of a coke in Germany that was made in Morocco made from Cuban sugar doesn't count at all in any trade deficit with the US, but it still results in money being sent to the US. (No, I don't know w
We used to run a trade surplus (Score:3)
Corporations wanted increased profits - the easiest way of doing that is to turn the US into a consumer economy. High income and high demand were suppose to spur great consumption - and it did, for a while. The problem is that greed wins and growth wasn't enough. As corporation profits increased, this wealth was used to buy politicians, target universities and judges (see the infamous Powell Memo - SCOTUS https://scholarlycommons.law.w... [wlu.edu] ) with the goal to pay less taxes and take more of the American pie. The result, wages stagnated since the 1980s, productivity increased over 50%, benefits were eviscerated while billionaire wealth globally has seen substantial growth, increasing by 121% between 2015 and 2024. The problem is accelerating. In 2024, the wealth of billionaires increased by a staggering $2 trillion. This represents a daily increase of approximately $5.7 billion. The rate of increase was three times faster than the previous year. https://www.ubs.com/global/en/... [ubs.com] The latest US budget is a perfect example - slash benefits giving billionaires more tax breaks, at a time when they're already living like kings above any laws.
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"It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness..."
http://www.boisdejustice.com/Drawings/Drawings.html [boisdejustice.com]
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Dickens was a remarkable writer. His stories are more relevant now than ever.
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Because we buy stuff (Score:2)
Life in America is expensive. We pay a lot for housing, healthcare, transportation, and food -but still we have disposable income. We are not a nation of savers. We do not generally have savings available in our bank accounts. We invest. We own stocks, bonds, mutual funds, IRAs, 401Ks, etc.
We spend what's left on buying stuff.
But we don't make stuff. Our economy has moved from manufacturing to services. We know things. We design things. We do things. Services count towards our GDP (because they ge
The population of the richest country in the world (Score:2)
The population of the richest country in the world enjoys spending its money buying nice things. Since they are the richest country in the world, the mean wage there is high. Consequently, it's much cheaper to buy certain things from other countries, where the wages are far lower. /s
We've been coasting through the decades (Score:2)
The US hit its peak productivity int the 20th century. Once we let the the vulture capitalism take root, the have slowly been extracting the wealth of this nation.
Thanks to propaganda of trickle down economics, the middle class thinks they have been earning interest on our investment. Rather than the reality that the vast majority of us have had our labor stolen from us. We've been encouraged or sometimes even forced into debt. The winners are the landlords, the bankers, and the capitalists that have be su
Maybe the quality... (Score:2)
World Reserve Currency and Service economy (Score:2)
Re:Simple (Score:5, Insightful)
Hmm. Communist = Friend of Putin? So you say Trump is an America-hating communist? Interesting. A bit far out, but makes some sense.
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Oh, your comment was serious? I though we were doing parody. My apologies.
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BINGO! If you want to see what the US fiscal balance would look like without Triffin, look north at the loonie and adjust X/M down. Not pretty and yet even it leans on the USD (as a proxy).
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After the USD comes the Euro, at roughly 1/3rd the amount.
1/10th is everything else.
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The US in 2024 had $2.94T in manufacturing output, 10% of US GDP. What don't we make here that we should make more of and how much is enough?
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We don't make or make enough consumer electronics, textiles, steel, pharmacutecals, airplanes, ships - need way more shipyards, etc. etc. etc. Visit the iron mine in Northern Minnesota - it is vast, and has just a few trucks and shovels working. It should be far more active, with the ore being smelted in the US and made into steel in the US, not shipped to (somewhere else) to have those things done. Pretty much everything that is not made here should be.
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See I can get down with steel and ships because those are national security concerns, not economic one's which is part of why I don't like the tariffs, Trump constantly conflates these two arguments (deceitfully or through ignorance) when they have little to do with each other and they make expanding those industries harder, not easier.
Everything else though you need to make an argument.
It's not jobs, we are at under 5% U3 rate and have been for awhile, we are labor constrained. It's not national security
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Let's see if we can make income inequality even worse? Price cell phones so high that only the top 3% can afford them?
Do you want to work for $10k/yr? If not, then fuck off.
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"...and the guy is super-productive, being worth the wages of those 100 people..."
And American billionaires are known for paying people what they are worth!
Definitely get rid of income taxes, though, that sounds super well thought out. We replacing that revenue with anything? Or will we just have Elon Musk pay the police and the military? They can all live in the company towns he's building, while you live on the street, at least until the diseases we can no longer control come for you.
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