[CanadianFella]

Scenario 1: I exchange 500$ for a television with a Chinaman. He then exchanges 500$ for western clothing with an American.

"trade deficit" with China: 0$

Scenario 2: I exchange 500$ for a television with a Chinaman. He converts them to Euros and buys a German blender. The Japanese money-changer who bought his USDs buys American clothing for 500$.

"trade deficit" with China: 500$, but for America the situation is exactly the same: buy 500$ (TV), Sell 500$ (clothing). The "trade deficit" is for economic illiterates and special interests (especially manufacturers) exploiting the useful idiots.

[Willie Green]

Scenario 1: I exchange 500$ for a television with a Chinaman. He then exchanges 500$ for western clothing with an American.
Scenario 2: I exchange 500$ for a television with a Chinaman. He converts them to Euros and buys a German blender. The Japanese money-changer who bought his USDs buys American clothing for 500$.

A fertile imagination can concoct many ludicrous scenarios.
The reality is that the American Textile Industry is being obliterated.
Do you have any other bright ideas???

[A Vast RightWing Conspirator]

The real scenario is this: you buy some junk from China for $500. Since you don't have anything to sell to China that China wants, you print $500. China is using the money to further 'modernize' its army, engaging in some cooperative nuclear effort with Pakistan, or maybe Israel.

The $500 you printed further increases the over-supply of Dollars, causing your currency to further decline and maintaining or increasing domestic inflation.

You are able to do the printing trick until your currency becomes fully discredited. When then happens, China is going to demand Euros, or gold next time you are trying to buy something from China. There's no way you can print Euros or make gold.

[A Vast RightWing Conspirator]

You are able to do the printing trick until your currency becomes fully discredited. When then happens, China is going to demand Euros, or gold next time you are trying to buy something from China. There's no way you can print Euros or make gold.

But, let me continue.

All of a sudden, your Dollars are not wanted by the Chinese any longer and... surprise!!!! you no longer have the ability to make the stuff you got used of buying from China for printed money.

Now... the 'fun' part begins...

[rollin]

Just one problem . . . The clothing is made in Jamaica or Indonesia, not the U.S.

[maui_hawaii]

Oh please. Don't start with those examples.

There are a few hard headed types with no experience in global trade that may actually believe them.

[sixmil]

Scenario 1: I exchange 500$ for a television with a Chinaman. He then exchanges 500$ for western clothing with an American. "trade deficit" with China: 0$

Scenario 2: I exchange 500$ for a television with a Chinaman. He converts them to Euros and buys a German blender. The Japanese money-changer who bought his USDs buys American clothing for 500$.

"trade deficit" with China: 500$, but for America the situation is exactly the same: buy 500$ (TV), Sell 500$ (clothing). The "trade deficit" is for economic illiterates and special interests (especially manufacturers) exploiting the useful idiots.

Here we have beautifully illustrated the unilateral free traders' 1st law of thermodynamics. Add to this the brand new science of nano-economics, and we have the neocon trade policy in a nut shell.