Reason for Trade Deficits

[West Dundee Hawkeye]

Trade is a function of SAVINGS.

Savings-Investment=Exports-Imports

If savings goes up in a country then exports go up.

Savings is the opposite of borrowing. Best way to increase savings is to stop the annual budget deficits the US runs. Since 1961, there has been 5 budget surpluses and 58 budget deficits.

Truman, Ike and Bill Clinton each had 3 budget surpluses.

1946-1960, the econ and markets boomed. Just like the 1990's under Bill Clinton.

Clinton passed higher taxes and matched it with lower spending.

If taxes go up and spending goes down, people will have less money. If they have less money, they spend less money. If they spend less money, then prices go down.

If prices go down the wages go down and interest rates go down. If interest rates go down, then the $ drops in value relative to other currencies. All this helps sell widgets.

GDP=Consumption+Gov Spending+Investment+ (exports-imports)

Consumption will go down but exports will go up helping the working class and growing GDP.

Almost everybody ignores this.

 

[seminole97]

Now plug in printing money and handing it out for people to buy things without savings and how that affects prices.

 

[ft254]

Trade is a function of SAVINGS.

Savings-Investment=Exports-Imports

If savings goes up in a country then exports go up.

Savings is the opposite of borrowing. Best way to increase savings is to stop the annual budget deficits the US runs. Since 1961, there has been 5 budget surpluses and 58 budget deficits.

Truman, Ike and Bill Clinton each had 3 budget surpluses.

1946-1960, the econ and markets boomed. Just like the 1990's under Bill Clinton.

Clinton passed higher taxes and matched it with lower spending.

If taxes go up and spending goes down, people will have less money. If they have less money, they spend less money. If they spend less money, then prices go down.

If prices go down the wages go down and interest rates go down. If interest rates go down, then the $ drops in value relative to other currencies. All this helps sell widgets.

GDP=Consumption+Gov Spending+Investment+ (exports-imports)

Consumption will go down but exports will go up helping the working class and growing GDP.

Almost everybody ignores this.

Why do trade deficits matter? If products are manufactured at lower costs than we could produce them, why bitch? If nations product items we can't, don't or simply won't, WTF? We had a very manageable and invisible trade situation until this Orange Fcvkhead took off on one of his kindergarten sojourns into his fairytale non-reality.

Now he's got us into trapped in this bullshit trade war he has to keep moving the goalposts to protect his ass. This is not a smart individual., and it you're not smart, you're dumb.

 

[ISUBryce]

Trade is a function of SAVINGS.

Savings-Investment=Exports-Imports

If savings goes up in a country then exports go up.

Savings is the opposite of borrowing. Best way to increase savings is to stop the annual budget deficits the US runs. Since 1961, there has been 5 budget surpluses and 58 budget deficits.

Truman, Ike and Bill Clinton each had 3 budget surpluses.

1946-1960, the econ and markets boomed. Just like the 1990's under Bill Clinton.

Clinton passed higher taxes and matched it with lower spending.

If taxes go up and spending goes down, people will have less money. If they have less money, they spend less money. If they spend less money, then prices go down.

If prices go down the wages go down and interest rates go down. If interest rates go down, then the $ drops in value relative to other currencies. All this helps sell widgets.

GDP=Consumption+Gov Spending+Investment+ (exports-imports)

Consumption will go down but exports will go up helping the working class and growing GDP.

Almost everybody ignores this.

This is so simple I can’t even begin.

If wages and prices go down that’s a very bad thing as we are probably entering stagflation.

 

[West Dundee Hawkeye]

Why do trade deficits matter? If products are manufactured at lower costs than we could produce them, why bitch? If nations product items we can't, don't or simply won't, WTF? We had a very manageable and invisible trade situation until this Orange Fcvkhead took off on one of his kindergarten sojourns into his fairytale non-reality.

Now he's got us into trapped in this bullshit trade war he has to keep moving the goalposts to protect his ass. This is not a smart individual., and it you're not smart, you're dumb.

The US needs a manufacturing base for:
1. The military
2. Pharma
3. Low skilled jobs

 

[West Dundee Hawkeye]

This is so simple I can’t even begin.

If wages and prices go down that’s a very bad thing as we are probably entering stagflation.

Stagflation includes rising inflation. Get your terms right.

The working class has not kept up with inflation for decades. Why should we condemn the working class to a lower standard of living?

 

[ISUBryce]

Stagflation includes rising inflation. Get your terms right.

The working class has not kept up with inflation for decades. Why should we condemn the working class to a lower standard of living?

if the tariffs stay on, there will also be imflation, because we cannot onshore production of everything on any reasonable timeframe.

 

[ISUBryce]

The US needs a manufacturing base for:
1. The military
2. Pharma
3. Low skilled jobs

We have a huge manufacturing base for the military already.

Pharma would be good to bring back home and there should be government incentives to do so.

We have so many low skilled jobs open already we don’t need to manufacture crappy little trinkets here.

 

[West Dundee Hawkeye]

if the tariffs stay on, there will also be imflation, because we cannot onshore production of everything on any reasonable timeframe.

I am not for tariffs on Great Britain, Canada, Europe, Australia, New Zealand and Japan.

I am for pausing all tariffs on South Korea, Mexico and India to hammer out free trade agreements with all three. Mexico must stop fentanyl, help secure the border and not let China pass products through Mexico. South Korea also needs to make sure that China does not pass through products from China.

 

[West Dundee Hawkeye]

We have a huge manufacturing base for the military already.

Pharma would be good to bring back home and there should be government incentives to do so.

We have so many low skilled jobs open already we don’t need to manufacture crappy little trinkets here.

Wrong.

China has 230x times the ship building capacity of the US.

90,000 factories have closed since China joined the WTO in 2001. How can you be so oblivious to the plight of the working class?

This is what happened to my wife's hometown in NE Iowa, after the big employer left.

 

[RileyHawk]

Wrong.

China has 230x times the ship building capacity of the US.

90,000 factories have closed since China joined the WTO in 2001. How can you be so oblivious to the plight of the working class?

This is what happened to my wife's hometown in NE Iowa, after the big employer left.

You seem to think manufacturing is the only acceptable option for the working class.

 

[ISUBryce]

Shipbuilding is an issue, no doubt about it.

Factories closing in small towns sucks. From what I understand Oelwein lost a lot of population from farm consolidation and the closing of a hog butchery. I can’t imagine China has much to do with that.

The working class is currently operating with a 4.2% unemployment rate and low wage manufacturing jobs will not be able to be filled. Ship building is highly skilled and specialized and the kind of thing we should be incentivizing returning here. Not hitting the entire economy with tariffs.

 

[ft254]

Wrong.

China has 230x times the ship building capacity of the US.

90,000 factories have closed since China joined the WTO in 2001. How can you be so oblivious to the plight of the working class?

This is what happened to my wife's hometown in NE Iowa, after the big employer left.

And why did factories close? International trade is dynamic. We can't compete for cheap labor. So, manufacturing migrates to where cheap labor offsets logistics issues. Or countries have better access to supply chains or resources. Usually trade evens out if leaders are capable of managing their affairs cooperatively. It's mutually beneficial. Trade agreements between and among countries resolve many or most issues.

It has to be said that the grenade the Orange Turd tossed onto the world trade arena has damaged America's reputation and trust, and the disruption many celebrate simply adds to the heap.

 

[West Dundee Hawkeye]

You seem to think manufacturing is the only acceptable option for the working class.

Manufacturing pays better than services jobs. Why do you think so many young men are living in their parents basement into their 30's.

 

[RileyHawk]

Manufacturing pays better than services jobs. Why do you think so many young men are living in their parents basement into their 30's.

They do? Tell that to those working on the manufacturing lines in foreign countries.

Your question brings up a completely different issue - an answer is that housing has become so expensive that low end manufacturing or service jobs can't support the mortgages needed.

Your premise is simple.

 

[chonk]

Why do trade deficits matter? If products are manufactured at lower costs than we could produce them, why bitch? If nations product items we can't, don't or simply won't, WTF? We had a very manageable and invisible trade situation until this Orange Fcvkhead took off on one of his kindergarten sojourns into his fairytale non-reality.

Now he's got us into trapped in this bullshit trade war he has to keep moving the goalposts to protect his ass. This is not a smart individual., and it you're not smart, you're dumb.

You are showing you are pretty dumb with these wrong and ignorant comments

 

[seminole97]

Under Bretton Woods the U.S. real comparative advantage is in its ability to create debt to purchase goods abroad.

Unfortunately, it’s a politically expedient and economically suicidal path.

 

[onlyTheObvious]

Lower standard of living makes for cheaper labor force.

As a middle class develops wages go up.

China isn’t as cheap as it use to be.

Arguement can be made robots and automation will kill most of it anyway so not worth radical tariffs.

 

[ft254]

Manufacturing pays better than services jobs. Why do you think so many young men are living in their parents basement into their 30's.

Why did the manufacturing jobs disappear. The same reason they won't reappear, at least to the level it will lift the economy appreciably.

Our economy has progressed past the single income hourly wage earner. Now it takes at least 2 incomes, and that second income often requires a huge outlay for daycare costs. This isn't the 1960's, 70's. etc. In many cases young families are saddled with college debt.

 

[hawkjt]

In china workers that build iPhones make about 12k/ year..iPhones made in US will cost at least 4 times what they currently cost....is that an efficient use of resources?
How fulfilling is that work?
We also lack the manpower with full employment currently.

 

[ft254]

You are showing you are pretty dumb with these wrong and ignorant comments

Bullshit. We haven't been in an unmanageable trade situation. The Orange Dipshit invented the tariff nonsense.

We are a trade deficit nation by our nature. Did you not notice how things were going smoothly until the Orange Dumbfcvk opened the can of worms?

You MAGAs will buy into anything the Orange Prick peddles. The financial gurus are not in the same room on this. He's on a island by himself on this. I'm ignorant and dumb? Maybe in your silo.

 

[seminole97]

Our economy has progressed past the single income hourly wage earner. Now it takes at least 2 incomes, and that second income often requires a huge outlay for daycare costs.

In what respect is it ‘progress’ that you think it takes two wage earners to provide sufficiently for a household?

 

[West Dundee Hawkeye]

They do? Tell that to those working on the manufacturing lines in foreign countries.

Your question brings up a completely different issue - an answer is that housing has become so expensive that low end manufacturing or service jobs can't support the mortgages needed.

Your premise is simple.

Any why is housing so expensive?

It is because of reckless fiscal and monetary policy in the US.

On the fiscal side, we borrow trillions to finance consumption as we run massive annual budget deficits. This is inflationary.

On the monetary side, the Fed printed trillions out of thin air to purchase Mortgage Backed Securities to push down rates to make homes more affordable which drove up demand and pushed home prices higher.

The focus on consumption over savings has led to higher inflation, which causes higher wages, which then make our workers less competitive and so millions of jobs have been outsourced.

So young people and especially young men, are seeing employment opportunities shrink and prices go up.

In the meantime, don't be fooled that we are adding jobs. We are not adding full time jobs. What we are adding is gig jobs like Door Dash and Uber.

 

[West Dundee Hawkeye]

Why did the manufacturing jobs disappear. The same reason they won't reappear, at least to the level it will lift the economy appreciably.

Our economy has progressed past the single income hourly wage earner. Now it takes at least 2 incomes, and that second income often requires a huge outlay for daycare costs. This isn't the 1960's, 70's. etc. In many cases young families are saddled with college debt.

And why does it take two incomes? Because prices are rising.

And why are prices rising? Because of massive gov spending since the Great Society with the exception of the Bill Clinton years. On top of that we had tax cuts in 1964, 1981, 2001, 2003 and 2017.

Throw in the bailouts of the investor class with Long Term Capital Management in 1998, TARP in 2008, QE in 2008 and Silicon Valley Bank in 2023.

If we balanced the budget, this would not happen.

 

[RileyHawk]

Any why is housing so expensive?

It is because of reckless fiscal and monetary policy in the US.

On the fiscal side, we borrow trillions to finance consumption as we run massive annual budget deficits. This is inflationary.

On the monetary side, the Fed printed trillions out of thin air to purchase Mortgage Backed Securities to push down rates to make homes more affordable which drove up demand and pushed home prices higher.

The focus on consumption over savings has led to higher inflation, which causes higher wages, which then make our workers less competitive and so millions of jobs have been outsourced.

So young people and especially young men, are seeing employment opportunities shrink and prices go up.

In the meantime, don't be fooled that we are adding jobs. We are not adding full time jobs. What we are adding is gig jobs like Door Dash and Uber.

Seems you need to learn about the "paradox of thrift".

Economies need consumption to grow.

Inflation in the 2-3% range is also needed for growth.

A job being "full time" doesn't make it better "gig" or other part time jobs.

Seems you're stuck in a very antiquated view of economics. Let me guess, you're a fan of the Gold Standard as well?

 

[RileyHawk]

And why does it take two incomes? Because prices are rising.

And why are prices rising? Because of massive gov spending since the Great Society with the exception of the Bill Clinton years. On top of that we had tax cuts in 1964, 1981, 2001, 2003 and 2017.

Throw in the bailouts of the investor class with Long Term Capital Management in 1998, TARP in 2008, QE in 2008 and Silicon Valley Bank in 2023.

If we balanced the budget, this would not happen.

It takes two incomes because there is more available for families to make their lives safe and enjoyable. And earning two incomes is more available than it was 50 years ago. Not to mention work is fulfilling for many.

There was a balanced budget with Clinton and that didn't create clamor for one income families - what is your solution to do so?

 

[ft254]

And why does it take two incomes? Because prices are rising.

And why are prices rising? Because of massive gov spending since the Great Society with the exception of the Bill Clinton years. On top of that we had tax cuts in 1964, 1981, 2001, 2003 and 2017.

Throw in the bailouts of the investor class with Long Term Capital Management in 1998, TARP in 2008, QE in 2008 and Silicon Valley Bank in 2023.

If we balanced the budget, this would not happen.

It is what it is. I say the slide started with Reagan. As good as the intensions may have been, the Republican party could not moderate his concept to adjust to real world conditions and blew budgets and deficits out of the water. Granted spending increased but to rationalize decreased revenue or even not increase revenue when spending increases is not responsible. Supply side economics was a pipe dream and when the concept was proven to be wrong and untenable, Republicans could not divorce itself from the idea.

The idea of less revenue generation is a core Republican principle. Lower taxes and the economy improves. Never mind decades of insufficient revenue by arbitrary low tax rates in addition to uncollected monies have caused a depleted treasury.

It's insane to argue that revenue has been adequate. Spending increased. Costs increased. Everywhere. Millionaires and Billionaires became a dime a dozen. Political financial judgement, or what there was of it was left in the dust

The Social Security system will dry up by year such and such. But if we had collected money over the decades, would we be in this situation, or at least this dire?

 

[West Dundee Hawkeye]

Seems you need to learn about the "paradox of thrift".

Economies need consumption to grow.

Inflation in the 2-3% range is also needed for growth.

A job being "full time" doesn't make it better "gig" or other part time jobs.

Seems you're stuck in a very antiquated view of economics. Let me guess, you're a fan of the Gold Standard as well?

So you think borrowing at levels this country has never experienced except in war, pandemics or extreme downturns is the answer?

Keynes says deficits are needed when times are tough but in good times, surpluses should be run. Since JFK, the US has run 5 surpluses and 60 deficits.

National Debt is now at $36 Trillion and the Interest expense is about to be the #2 item of the budget.

If you are trying to tell me a job as a Door Dash Driver without benefits is better than a full time job with benefits you are in a different world.

I am a fan of Truman, Ike and Clinton. The period from 1946-1960 and 1993-2000 were periods of incredible growth. Where the working class thrived. The Labor Force Participation Rate was at a post WW2 high during the Clinton years and has not reached that level since then.

As I have explained many times, when budgets are balanced, that means SAVINGS goes up and that means EXPORTS go up.

Savings-Investment=Exports-Imports

https://www.economicshelp.org/blog/6411/economics/current-account-savings-investment/


Economists have noted that if domestic saving are lower than domestic investment, we will see a current account deficit. Why?

Before we look at a more mathematical approach, it is helpful to think of a country which experienced a rapid fall in savings, but investment levels stay the same. A fall in savings means people are spending more (higher consumption) therefore, this would tend to suck in imports as we buy goods and services from abroad.

But, also, if domestic savings fall – how will the domestic investment be financed? The investment must be financed by capital inflows from abroad.

A country like Japan has had a glut of saving over investment. This saving has tended to go abroad looking for more profitable investment. Therefore, Japan has had a deficit on capital flows, and a corresponding surplus on the current account.

The US, by contrast, has often had a level of investment greater than savings. This has been financed by capital inflows and a current account deficit.

 

[Joes Place]

Trade is a function of SAVINGS.

Savings-Investment=Exports-Imports

If savings goes up in a country then exports go up.

Savings is the opposite of borrowing. Best way to increase savings is to stop the annual budget deficits the US runs. Since 1961, there has been 5 budget surpluses and 58 budget deficits.

Truman, Ike and Bill Clinton each had 3 budget surpluses.

1946-1960, the econ and markets boomed. Just like the 1990's under Bill Clinton.

Clinton passed higher taxes and matched it with lower spending.

If taxes go up and spending goes down, people will have less money. If they have less money, they spend less money. If they spend less money, then prices go down.

If prices go down the wages go down and interest rates go down. If interest rates go down, then the $ drops in value relative to other currencies. All this helps sell widgets.

GDP=Consumption+Gov Spending+Investment+ (exports-imports)

Consumption will go down but exports will go up helping the working class and growing GDP.

Almost everybody ignores this.

Trump University/X School Of Economic here folks....

 

[Joes Place]

If we balanced the budget, this would not happen.

If we taxed the rich like we did in the 1950s, 60s and 70s, we'd pay off the debt AND have a surplus.

 

[fsu1jreed]

If we taxed the rich like we did in the 1950s, 60s and 70s, we'd pay off the debt AND have a surplus.

FVCKING FACTS

 

[RileyHawk]

So you think borrowing at levels this country has never experienced except in war, pandemics or extreme downturns is the answer?

Keynes says deficits are needed when times are tough but in good times, surpluses should be run. Since JFK, the US has run 5 surpluses and 60 deficits.

National Debt is now at $36 Trillion and the Interest expense is about to be the #2 item of the budget.

If you are trying to tell me a job as a Door Dash Driver without benefits is better than a full time job with benefits you are in a different world.

I am a fan of Truman, Ike and Clinton. The period from 1946-1960 and 1993-2000 were periods of incredible growth. Where the working class thrived. The Labor Force Participation Rate was at a post WW2 high during the Clinton years and has not reached that level since then.

As I have explained many times, when budgets are balanced, that means SAVINGS goes up and that means EXPORTS go up.

Savings-Investment=Exports-Imports

https://www.economicshelp.org/blog/6411/economics/current-account-savings-investment/


Economists have noted that if domestic saving are lower than domestic investment, we will see a current account deficit. Why?

Before we look at a more mathematical approach, it is helpful to think of a country which experienced a rapid fall in savings, but investment levels stay the same. A fall in savings means people are spending more (higher consumption) therefore, this would tend to suck in imports as we buy goods and services from abroad.

But, also, if domestic savings fall – how will the domestic investment be financed? The investment must be financed by capital inflows from abroad.

A country like Japan has had a glut of saving over investment. This saving has tended to go abroad looking for more profitable investment. Therefore, Japan has had a deficit on capital flows, and a corresponding surplus on the current account.

The US, by contrast, has often had a level of investment greater than savings. This has been financed by capital inflows and a current account deficit.

You're in a tizzy.

Is the overall standard of living better now than it was 50 years ago?

Your analysis is very simple and antiquated.

 

[West Dundee Hawkeye]

You're in a tizzy.

Is the overall standard of living better now than it was 50 years ago?

Your analysis is very simple and antiquated.

Not for the working class. The Middle Class is shrinking.

Why don't you just say let them eat cake? Your thinking has permeated the Dems for years and what is so crazy is the Dems used to be the party of the working class.

 

[RileyHawk]

Not for the working class. The Middle Class is shrinking.

Why don't you just say let them eat cake? Your thinking has permeated the Dems for years and what is so crazy is the Dems used to be the party of the working class.

You're wrong. There are far fewer in poverty and the middle class has benefits they never had previously.

As an example - air conditioning. That was uncommon for the middle class 50+ years ago but it is standard now. There are many more examples.

Your thinking is very shallow.