PeakTrader.com

[administrator]

James said...

The trade deficit is being financed with both real debt and technology transfer both of which will bite us in the long run.

------

PeakTrader said...

James says: "The trade deficit is being financed with both real debt and technology transfer both of which will bite us in the long run."

Consumption rises when prices fall.

And when prices fall enough, you'll borrow.

Would you prefer higher prices and less consumption to reduce trade deficits?

One reason the U.S. has trade deficits is American technology commands a high price (i.e. market power).

---------

James said...

Once upon a time we had low end manufacturing jobs for those with no high school. They did not earn a lot but they had enough skill to earn a decent living. Then we decided to sacrifice those jobs to the Great God Free Trade. As a nation we have nobly decided unemployment for those without high school is better than having trade protection. Jobs once done by Americans without high school are now done by non-Americans without high school. Collateral damage from these lost jobs is a growing number of college graduates who once got jobs as management and administration in businesses that employed these workers are now moving back in with their parents after graduation.

The blessings that the Great God Free Trade bestows upon us for making these sacrifices can not be seen by ordinary people. But not to worry. Universities backed with money from multi-national corporations ordain High Priest Economist with PhDs to go forth and preach the Gospel of Free Trade to the heathen. What a pity those unemployed high school dropouts can not comprehend the wisdom of sacrificing jobs for which they had the skill and experienced to do. In any event their plight is nothing a sophisticated college graduate should be concerned about.

--------

PeakTrader said...

James, if we slowed the inevitable, most of us would still be farmers.

When you see the losses of low-paying jobs, you also need to look at the gains of high-paying jobs.

---------

PeakTrader said...

Does the U.S. really have trade deficits? - I stated before:

If someone is willing to sell you something at half price, you may buy three units instead of one (given your budget constraint).

So, for example, 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 $15 surplus (because you paid $15 for $30 worth of goods).

---------

PeakTrader said...

I'm sure, export-led economies, e.g. China, never suspected they could destroy the U.S. economy by diverting dollars from the U.S. private sector (selling their goods too cheaply) to the U.S. public sector (buying expensive Treasury bonds).

-------

PeakTrader said...

It's easy, for some, to blame monetary and fiscal policies for problems caused by other economic policies.

--------

PeakTrader said...

If we had a V-shaped recovery, the federal government would be collecting much more in taxes and spending much less in entitlements, including unemployment benefits. Also, state budgets would be stronger.

The Obama Growth Discount
APRIL 15, 2011

If we had matched the 1982 recovery rate, today annual per-capita income would be $4,154 higher than before the recession—that's an extra $16,600 for a family of four—and some 15.7 million more Americans would have jobs.

Some apologists suggest that the current recovery is so weak because the recession was so deep. But the totality of our experience in the postwar period is exactly the opposite—the bigger the bust, the bigger the boom that follows.

Federal spending 2007: $2.73 trillion.
Federal revenue 2007: $2.57 trillion.
Budget deficit 2007: $161 billion.

Federal spending 2011: $3.82 trillion.
Federal revenue 2011: $2.17 trillion
Budget deficit 2011: $1.65 trillion.

(2011 estimates)

------

PeakTrader said...

"In 2010...the federal government spent $3.45 trillion, and made about $2.3 trillion in "payments to individuals"."

And, in 2010, total federal revenue was less than $2.2 trillion.

------

PeakTrader said...

Unless there are major changes, the U.S. is in decline, at least through the 2030s, from slow economic growth, an aging population, and dismal public schools.