Posted on 10/11/2015 2:29:31 PM PDT by EricGurr
This is from fellow freeper and congressional candidate in Ohio Eric Gurr
Wow, I wish you the best! I hope you win!
Thanks! I really appreciate it. Might be a little easier now that Boehner has retired (or will soon.)
Protectionist, tariffs, import duties, quotas were in the lexicon of the founding fathers daily speech.
Cantor him.
The multiplier affect.
Good luck with that. I’ve been trying to hammer it home for twenty years.
At one point we were experiencing a trade deficit with China that was approaching $700 billion dollars per year. Using the multiplier effect theory, I tried to get folks to grasp the impact of $3.5 trillion dollars, the trade deficit times five. In fact, it can reach ten times.
I tried to explain it like this.
$3.5 trillion in economic activity lost to our economy is like 2,000 cities losing $1.5 billion dollars in commerce each year. Crickets. As the multiplier effect approaches ten times you’re looking at 4,000 citiez losing that much economic activity. Crickets.
How many jobs would we be talking here?
Well at a rate of five times the multiplier effect, we’re talking 70 million $50 thousand dollar a year jobs.
If we’re approaching $10 times the multiplier effect, we’re talking about 140 million $50k jobs, or 70 million $100k jobs.
Folks yawn and roll over. What can I say.
Good luck to you. You’re exactly right.
You deserve the votes on this issue. No doubt about it.
These days, the dollars come back in the form of foreign purchases of U.S. Treasury bills, which are currently being issued at interest rates close to 0%. So ... in effect, U.S. trade deficits are actually being used to finance massive budget deficits here in the U.S. China lends us money at an interest rate of almost 0% to fund all of the things that would bankrupt this country if we had to pay for them ourselves (Medicare, Social Security, the largest military in the world, etc.).
The problem is that the money multiplier is very low in this recession/depression, nowhere near 5. Less than 3, I think.
Meant to say ‘less than 2’ — need new glasses?
I’m hoping the voters are sick of the same old thing and are ready to do something about the economy. Not all tariffs are good, but the one on some Chinese goods sure would be.
That’s the technical argument but I don’t think it holds up to scrutiny. The money doesn’t have to come back if Saudi Arabia accepts it for oil and then just sends it back to China to purchase goods. The Canadian dollar, the Mexican Peso and other currencies aren’t universally accepted, the dollar is.
To make the argument that it has to come back at some point (even if to support deficit spending) doesn’t really solve the problem. It could take years, and while it’s gone it isn’t circulating here.
The other issue of course the devaluation of the yuan. What other course of actions exists short of weakening our own currency? I’m being honest here. I can’t think of another thing you could do.
The yuan is a perfect case in point. The "devaluation" you mention completely misses the point. The yuan has never been "devalued" in any objective sense. The yuan is heavily OVERVALUED because it has no value other than for trade with China. It's a modern-day version of credits at a company store: it's worthless to anyone who wants to do business anywhere other then the company store. The fact that China, Saudi Arabia and Brazil use it for trade among themselves speaks volumes about just how worthless their own currencies are.
I think you've missed the point entirely with the "multiplier" discussion in the video. If you're really concerned about the multiplier effect of $20 dollars spent on imported products from China, then you're actually making the case for the very first scenario in the video -- where the U.S. government takes the money from one person and gives it to someone else. The multiplier effect of money taken from taxpayers and given out to people who don't earn it is exactly what Democrats have in mind when they push that kind of nonsense. Under that argument, a public school district that spends $20,000 per student and hires illiterate teachers is doing just fine ... because the money is ultimately going to be spent on groceries, haircuts, cable TV cell phones, and even prison cells for the students who are taught by those illiterate teachers -- right?
bfl
No I disagree with that entirely. If I’m reading you right you’re suggesting that GIVING money to someone helps the economy. It does not as there is no productive drive behind the transaction. It creates no new good or service.
And wouldn’t it be better if we are going to be the reserve currency of those other nations allowed their currencies to float against the dollar?
On the devaluation of the yuan I don’t know how you can say it is over valued. We have no idea what it is worth because they set the price themselves.
If however you are right does it really make a difference? You must accept that they devalued it. At what point do you stand up and say enough!
Also, do you really think that massive trade deficit we’ve had for the last ten years has helped the economy?
I am not sure. I’ve read some of Ian Fletcher on this. He makes great sense, until I go back read (or listen) to Milton Freidman.
Does the consumer benefit? No, the reductions in prodution cost goes to the stock holders.
Sad to see the Free Traitor™ Army run amok on your thread. I hope you win.
I agree with you on this. I'm just pointing out that if you're using an economic multiplier as the basis of your argument, then GIVING money to someone has its own multiplier effect. My point is that using the multiplier effect for economic analyses will often give results that may be the exact opposite of what you want.
And wouldn’t it be better if we are going to be the reserve currency of those other nations allowed their currencies to float against the dollar? On the devaluation of the yuan I don’t know how you can say it is over valued. We have no idea what it is worth because they set the price themselves.
You're just looking at these currencies in terms of trade transactions. There's a reason why China has to set the price of its own currency by itself: it's because it's a worthless currency outside of China. What you see at work here is something that nobody would ever allow here in the U.S.: By pegging its currency to the U.S. dollar and using the U.S. dollar for their own international trade, China has basically set itself up as a slave colony of the United States. Their slaves get paid in yuan, and the yuan has no value other than what the Chinese government says it has. The lesson here is that the currency of a nation with a closed economic system and government-run industries is completely worthless.
Do you really think that massive trade deficit we’ve had for the last ten years has helped the economy?
I don't think it has really helped or hurt our economy at all. I see a massive trade deficit as the natural course of events that unfolds when a country gets so large and advanced that it has the highest standard of living in the history of mankind. We can basically have one of two things here in the U.S.: a high standard of living or an unemployment rate (a real unemployment rate, that is) near 0%. We can't have both, because we can never afford to buy everything we take for granted if we have to pay American labor to produce these things.
Yeah but I’m ok with it if they make logical points and are civil in the discussion.
I've always said that it comes down to this one very simple point:
1. Ask yourself how much you are willing to pay for [X] (whatever that may be: a car, a haircut, an iPhone, etc.).
2. Ask yourself how much you would want to get paid to produce that same [X].
The difference between these two numbers -- and it is probably very large, if you're really honest in your assessment -- explains why advanced countries with a very high standard of living usually import a lot of things from Third World countries.
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