Posted on 06/21/2012 11:06:18 AM PDT by moonshot925
The United States had a trade surplus every year from 1894 to 1970.
The trade deficits started in 1971.
1975 was the last year the United States had a trade surplus.
We have had a trade deficit every year since 1976.
I have heard some people say that tariffs are a good thing to reduce our trade deficit.
Bad idea?
Not necessarily, if you don’t mind paying more money for your stuff, regardless of whether it is produced here or not.
What’s a trade deficit? Why do we care?
Whenever I buy Chinese (or German, Japanese, Italian, South Korea or American) products, I use US dollars.
1. Trade deficits are impossible.
2. A tariff is a tax. If you wanted to buy X at Y price, and a tariff makes is Y + Z, you (a) will no longer buy it, which is bad, because both you and the seller are now poorer than you otherwise would have been, or (b) might buy it anyway, but spend more of your waking life working/paying for it than is necessary, and that is bad. Also, the gov. will be working (with your money) to keep an inefficent producer in business. Said producer uses N + P resources to produce a product, while his tariff burdened competitor uses only N to produce it. Bad.
A tariff does not reduce deficits, it makes many people poorer and transfers wealth from you to government favored maggots.
Yep. It’s like tryin’ to tell a lib that an “assault rifle” is not a futuristic killing machine, only slightly less lethal than an ICBM.
When the US has an unfavorable balance of payments with another country, that country has more funds to invest in America and buy our products.A massive inflow of foreign funds is beneficial to capital accumulation in America and economic development of America in the long run.Any decrease in the money supply of America by a negative balance of payments can be replenished by creating money out of thin air.
Trade surpluses, in and of themselves, are neither bad nor good. They are simply a reflection of a country's monetary policy. The U.S. runs an extremely inflationary monetary policy and, therefore, runs a high trade deficit. Germany maintains a relatively stable monetary policy (as Japan did until just this year) and runs a surplus.
China is in the process of inflating wildly and its trade surplus is declining rapidly.
It's false to claim that trade deficits must be "financed." They don't. Good post.
Since the 1970s we have had very large trade imbalances where we imported far more than we exported, and over that time our living standards have steadily eroded.
But you are treating the trade balance as the only thing that's changed. You also have to take into account that the federal deficit has exploded, regulations on business have multiplied, and the Fed's monetary policy has continued to make the dollar more and more worthless.
All of those contribute to our falling circumstances. The trade deficit is just a symptom -- not the cause.
Sorry, I don't follow you. Chronic, continual, large trade deficits must be paid for in some way. Unless you can truly enslave another country, you must pay for your imports from that country. Payment must be in terms of goods or services or, if you happen to possess the world's reserve currency, bits of paper or even bits of electrons on a digital account will suffice.
Sorry, I don't follow you. Chronic, continual, large trade deficits must be paid for in some way.
When I buy stuff, I pay cash. So why does my purchase of Japanese electronics or Swiss chocolate, both of which increase our trade deficits, have to be financed again?
Ok, read my post 31. Your purchase of Japanese electronics with US cash dollars is already financed by US cash dollars. You are trading bits of paper for real goods. As long as the producers of the real goods will accept your fiat money, everybody is happy.
Seriously, check it out . . . the next time you see someone start during the 1970's, they are probably playing an entirely different angle.
My understanding of the word "financed" is "paid for with borrowed money".
No, I heartily agree. We didn’t wake up one morning with a severe trade deficit out of the blue. It was the result of a lot of failed policies and practices.
I just don’t like to see people sugar coat our failed trade policies that are among the contributing factors to our reduced standard of living, as if it is a good thing or is at least neutral.
Are you willing to argue that your standard of living is lower than it was during the 1970’s?
The ability to purchase goods from around the world raises our standard of living.
Purchasing things does not increase your standard of living. At least not in the long term.
Your standard of living goes up when your wealth is increasing.
Wealth increases because you are engaging in productive work.
People engage in productive work because they are being paid.
If people are paying for goods manufactured in other countries, this negatively impacts the amount of productive work, and the amount of wealth, and the standard of living in the USA.
Really? You have a very confused understanding of the term.
Your standard of living goes up when your wealth is increasing.
And when you are able to use your "wealth" to purchase what you'd like, from other countries even, your standard of living improves.
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