Posted on 06/22/2013 8:04:29 AM PDT by blam
10 Reasons Why America Will Continue To Dominate The Global Economy For Years
Steven Perlberg
Jun. 22, 2013, 7:08 AM
Flickr / Tambako the Jaguar
The U.S. economy is in recovery mode right now.
Sure, investors have been spooked by Fed taper talks, the Bank of Japan's unprecedented economic experiment, persistent jitters out of Europe, and concerns of a credit crisis in China.
But by in large, investors should be pleased with the way things are going domestically, according to a new report from Joseph Quinlan, Chief Market Strategist for U.S. Trust.
We walk you through U.S. Trust's 10 theses that show "what's right with America."
1) The U.S. economy is the largest and most productive in the world - The U.S. accounts for one-fifth of global GDP with only 4.5% of the world's population. America's economy is nearly twice the size of China's in nominal dollars. Plus, the U.S. is one of just a few developed countries with real GDP higher than it was before the crisis, according to the report.
U.S. Trust
2) The U.S. leads the world in manufactured goods - Nominal manufacturing output totaled $1.9 trillion in 2012, a rise of 27% from 2009. Employment in the sector has increased by 500,000 workers since 2010, according to U.S. Trust.
U.S. Trust
3) The U.S. is among the largest exporters of goods and services - Exports since the recession have taken off. In 2012, total exports totaled $2.2 trillion, nearly a 40% rise from 2009 levels, according to the report.
U.S. Trust
(snip)
(Excerpt) Read more at businessinsider.com ...
If you believe Chinese government numbers.
Tariffs won't increase spending. It takes a vote of congress to increase spending. Congress and Congress alone can increase spending.
But I'd be fine with cutting income taxes or corporate taxes by the amount of the tariff increase so that it's tax neutral.
And they won't reduce spending. Or increase savings.
Tariffs just punish American consumers so to protect American unions from having to compete with the rest of the world. If an American worker can’t produce more value than some peasant in China... Then perhaps he ought to consider doing something else.
No it's the lack of tariffs that punishes Americans. It wipes out American jobs and forces us all to pay for the unemployed.
If an American worker can’t produce more value than some peasant in China... Then perhaps he ought to consider doing something else."
So you're okay with Americans reducing their wages down to $2 a day so as to compete with the Chinese communist slave labor. Your realize that Chinese policies keep their people poor and paid low. But you're going to bring America down to their level.
People can get paid whatever they’re worth according to their productivity. If you think American workers are only worth $2/hr I’m going to have to disagree. I think American workers can compete with anybody.
So the question is whether the trade deficit comes with a bad economy or comes with a good economy--
--and what we know for sure is that a growing trade deficit is followed by more people getting work, and that when the trade shrinks people become unemployed. We can all have opinions on why it happens but it's not healthy to pretend that things are other than the way they are.
...payments is balanced only because we sell a lot of government debt, corporate debt and ownership of our industries...
Actually no.
This idea of a trade deficit making America poor again conflicts with reality. If it were true then America's total private net worth would have shrunk when the TD was bigger and grew when the TD fell. It didn't, in fact the opposite is what happened.
The fact is that the so-called 'trade-deficit' is the "accounting construct". If I hire Chinese musicians to write songs that I copyright in my name, and then I pay them with the rights to my new book, it's a trade deficit. The next year I can cause a trade surplus if a Chinese book company hires me to write and I use my paycheck to buy the rights to songs written my my musician friends.
Both years it's the same work and same products and only the names of the products change; but one year's a deficit and the next is a surplus.
Here's a better chart that shows the unemployment rates that followed in countries that ran big trade deficits vs countries that didn't. 
from this site
Deficit Spending doesn't work Balancing Trade Does
This article analyzes the trade deficit on an input/output basis by individual industry and determines that over $3 million us jobs are being displaced by Chinese imports.
No the trade deficit is not big enough in any given period to see an immediate impact on net worth. It's the combined effect of many years of large trade deficits that will eventually begin shrinking net worth.
"If I hire Chinese musicians to write songs that I copyright in my name, and then I pay them with the rights to my new book, it's a trade deficit. The next year I can cause a trade surplus if a Chinese book company hires me to write and I use my paycheck to buy the rights to songs written my my musician friends."
Show me the trade surpluses with China.
You're example makes it sound like trade is even and one year there's a deficit and the next is a surplus. But that's not the case.
A better example would be that you hire Chinese musicians to write music that you copywrite in your name. China ignores the copy write and produces your song and sells it on the black market. Then the government taxes 90% of the Chinese earnings and song sales and uses that to buy the production company that you had a contract with.
Now they no longer need you, so you're in the unemployment line. Meanwhile, the Chinese production company continues to hire the Chinese music writers and sell to Americans. All the while the Chinese communist government continues to soak up the profits so that they can buy the next target.
Oh and along the way they plant some articles about how China is about to implode.
e suggests if that relationship was true, then the simple solution to American unemployment would be to eliminate exports and let the trade deficit soar! ROFLMAO. Everyone should be employeed in no time! LOL
That is after all the logical conclusion of the relationship that you and the CATO institute are implying exists. LOL Cato on China trade: Looking glass economics
I didn’t know what it meant, myself. I just knew what the words were.
When I looked it up, that was the first time I knew where it came from. Probably true of 99% of the people who use it.
Old data... China is now out-exporting America. And growing.
No, they're the latest 2012 data--
| US 2012 export of goods'n'services = 2,194.491 Billions of Dollars China exports 2012 = 2049.185 Billions of Dollars |
--and they're also the only data we got. That "out-exporting America" story isn't data, it's a tired old feeeeling.
If it were true then America's total private net worth would have shrunk when the TD was bigger
the trade deficit is not big enough in any given period to see an immediate impact on net worth
Wait a second, first, the U.S. is selling a lot of ownership but then "a lot" suddenly becomes "not big enough" for impact. Let's chuck the vague commentary and stick to hard facts concerning the so-called trade deficit and America's ownership of wealth over the past decade:
America got rich when the so-called trade deficit grew, and America was hurt when the deficit fell.
I’ve heard differently.
So we’ll just disagree at this point.
Either way, we need to pay attention, and address this growing problem.
If in fact we really do need to "pay attention and address" the problem then the first step is to get the facts and get clear on what this problem is. US Exports of goods'n'services is at an all time high. That shouldn't be a problem. Some people say what America does isn't as important as what other countries do, and if say, China exports a lot then it's a problem.
I'm not what we'd call a 'globalist' to the point that how folks in other countries live matters more than how we live.
Is that the best argument you have, to twist my words to something I didn't say? I said not big enough to reduce wealth in a single period. It takes many years of trade deficits and lost industries before you will see our net wealth actually declining.
And what your chart shows is that Net household wealth has stagnated over the last 10 years. Nobody is making any progress any more. That alone should be a big red flag!!!
If you really believe that CATO crap about trade deficits leading employment, then do eliminate exports, let the trade deficit go through the roof and put everyone back to work. But you know as well as I that the trade deficits helping employment is a laughable theory.
That chart and argument alone should have you second guessing the credibility of the CATO institute. CATO was founded with a single mission to promote free trade. And they apparently will use any argument no matter how ridiculous to advance their cause.
Is that the best argument you have, to twist my words to something I didn't say? I said not big enough to reduce wealth in a single period. It takes many years of trade deficits and lost industries before you will see our net wealth actually declining.
And what your chart shows is that Net household wealth has stagnated over the last 10 years. Nobody is making any progress any more. That alone should be a big red flag!!!
If you really believe that CATO crap about trade deficits leading employment, then do eliminate exports, let the trade deficit go through the roof and put everyone back to work. But you know as well as I that the trade deficits helping employment is a laughable theory.
That chart and argument alone should have you second guessing the credibility of the CATO institute. CATO was founded with a single mission to promote free trade. And they apparently will use any argument no matter how ridiculous to advance their cause.
I will give you 17,000,000,000,000 reasons it won't.
Work with me on this. The left and right vertical axis's of the above Federal Reserve chart are both labeled "Change from year ago", so what we got is the $six trillion is not the amount of wealth, but rather the increase of wealth. Same with the trade deficit. Here are the same numbers plotted by the Federal Reserve with total levels--
--and it not only shows (once again) how wealth grows fastest with a bigger so-called 'trade deficit', but it also shows current wealth at an all time high --albeit growing not as fast with a smaller trade deficit.
The thing is to understand that the half trillion annual trade deficit is not an annual loss of a half $T of wealth.
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