PeakTrader.com

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PeakTrader said...

There seems to be persistent ignorance by some about the U.S. international trade position.

The gains of lower U.S. prices and interest rates exceed the losses of U.S. output and employment.

Therefore, the U.S. has been able to consume more with less effort, which raises living standards at a steeper rate.

The virtuous U.S. cycle of consumption-investment can only continue when the U.S. can buy goods too cheaply and borrow dollars too cheaply.

If foreign goods become too expensive, the U.S. will save instead of spend and both the current account deficit and the capital account surplus will shrink.

Also, being ignorant of the mechanisms that keep the global economy in equilibrium is not a market distortion.

Moreover, for the average person, it's harder to become a biochemist than a factory worker.

So, when the U.S. shifts into new economic revolutions facilitated by globalization (e.g. free trade, open markets, and unrestricted capital flows) employment growth lags.

International trade has allowed the U.S. not only to lead the world in the Information and Biotech Revolutions, but lead the rest of the world combined (in both revenues and profits).

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PeakTrader said...

Rufus II, you're confusing the market economy with the government.

Squandering money won't likely make you rich.

The U.S. government "refunding" the dollars back to the U.S. private sector would've been best for the U.S. economy. However, it decided to spend those dollars instead.

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PeakTrader said...

Rufus II, it's perfectly rational to spend and borrow when goods and capital are too cheap.

Would you prefer if they were too expensive?

Also, when a theory is supported mathematically and empirically, and fits in the puzzle perfectly, then you know the theory is correct.

Anyway, I agree with your implication that the U.S. government has broken the system or the model, which benefited the U.S. economy tremendously in the past.

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