PeakTrader.com

[administrator]

Buddy R Pacifico said...

morganovich, you cannot deny that if the trade balance of $498 billion was instead U.S. Exports, that this would create substantial jobs and economic activity. This is much better then a transfer of the ownership of capital (macro) by a trade deficit. I don't argue against international trade but rather, for closely balanced trade.

--------

PeakTrader said...

Buddy says "I don't argue against international trade but rather, for closely balanced trade."

How do you suggest the U.S. narrows its trade deficits? Reduce U.S. income (or give away U.S. income to our trading partners), create trade barriers, disallow offshoring, replace the dollar with a foreign currency?

Why trade a good for another good, when you can receive that good for free?

---------

Buddy R Pacifico said...

Peak Trader states:

"Why trade a good for another good, when you can receive that good for free?"

"...goods for free..."; then:

Free? Wal-Mart will have almost zero revenue because their wares have no cost.


Free? There is no trade deficit, because all imports have zero cost.

Free? There are no economic problems because everything is free if, U. S. residents buy only imports.

---------

PeakTrader said...

Buddy, WalMart will make bigger profits from cheaper (or free) imports.

When you can buy 11 units for the price of 10, then one unit is free.

Americans can consume the work of foreigners and then work on producing more valuable goods.

The U.S. cannot be punished for better economic policies than its trading partners, including open markets and free trade.

If someone is willing to sell you something for half price, you may not buy twice as much.

You may buy three times as much (given your budget constraint).

So, you'd "import" three units for $15 and "export" one unit for $10, creating a $5 trade deficit.

However, you really exchanged your $10 good for three $10 goods, or $30, i.e. a $20 surplus.

Yet, your trade deficit is measured as $5.

---------

http://www.blogger.com/comment.g?blogID=28997633&postID=2221080401247705743