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I always thought that for a country with the World’s reserve currency, the USA ought to maximize its trade deficit instead of worrying about reducing it. It get

I always thought that for a country with the World’s reserve currency, the USA ought to maximize its trade deficit instead of worrying about reducing it. It gets scarce, useful stuff (iPhones, raw materials, food) in exchange for green bits of paper that the USA can print an unlimited supply of. The green bits of paper are usually invested back into the USA creating jobs and other economic opportunities (no point in hoarding it if it gets inflated).

toomuchtodo 8y ago
> The green bits of paper are usually invested back into the USA creating jobs and other economic opportunities (no point in hoarding it if it gets inflated). The "green bits" are pumped into real estate across the US (not to mention Canada, the UK, and Auckland), inflating housing prices and making it harder for housing consumers to acquire property (kudos Vancouver for your foreign buyer tax!). Jobs are not created with these investment dollars. Warren Buffet warned us of this: https://www.youtube.com/watch?v=bGo_NL-eclw https://www.youtube.com/watch?v=bGo_NL-eclw (trade imbalances lead to serfdom)
- ryan_j_naughton 8y ago
  While increased demand for real estate had definitely played a substantial role, housing costs could be flat or even decrease if we simply increased supply dramatically. There are a limited number of people but there is a cubic amount of space if we build up. If we had policies that encouraged always building then housing prices would collapse and we wouldn't have an affordable housing problem at all, even with foreign investors buying speculative property.
  - toomuchtodo 8y ago
    Or we could curtail speculative investment from a foreign nation's citizens (as other countries do, Thailand and Mexico come to mind) and not have to find ways to radically increase housing supply that we're not able to accomplish regardless. The charade that housing supply momentum can adjust faster than capital movement needs to end. In places that can build more housing, it is done. In places it can't be done, or the local citizens don't want it done, it is not. "Build, baby, build!" is just as ridiculous as "Drill, baby, drill!" [1] We work backwards from those two fundamental truths. [1] https://en.wikipedia.org/wiki/Drill,_baby,_drill https://en.wikipedia.org/wiki/Drill,_baby,_drill
  - basementcat 8y ago
    For various reasons there seems to be a tendency for those who invest in real estate to exercise their political power in such a way as to maximize the value of their investment. Some of those who look for a reason why affordable housing is scarce in their community may consider looking in the mirror.
    - Fjolsvith 8y ago
      Exactly. The wealthy landlords in our small rural community vetoed a Walmart, vetoed a community college and continually try to prevent new home construction.
  - ben_w 8y ago
    It’s complicated. Sure, there is way more space than people if we want it, but a surprisingly large number want to live in the same few places. If many want to live in Manhattan, and they do, you’ve only got Manhattan to fill up and then the prices rise, which they did.
  - shard972 8y ago
    > housing costs could be flat or even decrease if we simply increased supply dramatically I have a feeling places like SF and NY have already tried this. Considering most of these foreign investors are most interested in these two cities over lets say Nebraska, it's hard to see how NY just needs to "build more supply" is a solution. > If we had policies that encouraged always building We have those in Australia, it's called negative gearing. We also have the most expensive houses when compared to average income and our cities have taken your advice and started to build up at rapid paces. Still hasn't worked. The Aus government is now suggesting we lower our immigration cap from 1% of total pop yearly so maybe that will help.
    - GlennS 8y ago
      Not sure negative gearing is actually intended to increase house building? Isn't it just a strange (legal) tax loophole which enough people take advantage of that it's difficult to get rid of politically?
      - goodcanadian 8y ago
        Well, it likely increases housing prices by reducing the effective cost of leverage.
  - ShorsHammer 8y ago
    You don't even need to build up. There's plenty of land at current densities, it's zoning and people with guns/legal authority that prevent others from building where they want to.
- basementcat 8y ago
  Higher real estate prices in the USA generally mean more money for schools, libraries and other local government services.
  - acjohnson55 8y ago
    Not so great if you can't afford to live in the most economically advantageous parts of your country.
  - deleted 8y ago
    [deleted]
  - ben_w 8y ago
    It also makes those things more expensive, both for the property those services occupy and for the cost of paying high enough salary to attract necessary staff. Also there are other forms of tax besides property tax, so governments don’t need expensive property to fund their services.
  - pound 8y ago
    Not with Prop 13 in California..
- addicted 8y ago
  WHich is something that is completely controllable, as the Vancouver example you point to. Irrespective of whether that’s a good thing or not, the point is, the problems with real estate investments isn’t because of the trade deficit, but because the US doesn’t take any steps to prevent the money being invested in real estate.
ajross 8y ago
> I always thought that for a country with the World’s reserve currency, the USA ought to maximize its trade deficit instead of worrying about reducing it Indeed. That was basically post-war US economic policy in a nutshell. The worrying about reducing the trade deficit is a purely political argument. Trump is simply the first person in power to actually believe the nuttery.
smokeyj 8y ago
Venezuela tried that. Now they have petro coin.
- basementcat 8y ago
  Venezuela doesn’t control the world’s reserve currency.
  - mehwoot 8y ago
    Neither would the U.S. if they had hyper inflation.
    - vkou 8y ago
      It's almost as if there is no middle ground between zero percent inflation, and worthless-trillion-dollar-bill hyperinflation.
polotics 8y ago
Well this used to be true. However the Eurodollar futures selloff started. All bets are off.

toomuchtodo 8y ago

> The green bits of paper are usually invested back into the USA creating jobs and other economic opportunities (no point in hoarding it if it gets inflated). The "green bits" are pumped into real estate across the US (not to mention Canada, the UK, and Auckland), inflating housing prices and making it harder for housing consumers to acquire property (kudos Vancouver for your foreign buyer tax!). Jobs are not created with these investment dollars. Warren Buffet warned us of this: https://www.youtube.com/watch?v=bGo_NL-eclw https://www.youtube.com/watch?v=bGo_NL-eclw (trade imbalances lead to serfdom)

ryan_j_naughton 8y ago
While increased demand for real estate had definitely played a substantial role, housing costs could be flat or even decrease if we simply increased supply dramatically. There are a limited number of people but there is a cubic amount of space if we build up. If we had policies that encouraged always building then housing prices would collapse and we wouldn't have an affordable housing problem at all, even with foreign investors buying speculative property.
- toomuchtodo 8y ago
  Or we could curtail speculative investment from a foreign nation's citizens (as other countries do, Thailand and Mexico come to mind) and not have to find ways to radically increase housing supply that we're not able to accomplish regardless. The charade that housing supply momentum can adjust faster than capital movement needs to end. In places that can build more housing, it is done. In places it can't be done, or the local citizens don't want it done, it is not. "Build, baby, build!" is just as ridiculous as "Drill, baby, drill!" [1] We work backwards from those two fundamental truths. [1] https://en.wikipedia.org/wiki/Drill,_baby,_drill https://en.wikipedia.org/wiki/Drill,_baby,_drill
- basementcat 8y ago
  For various reasons there seems to be a tendency for those who invest in real estate to exercise their political power in such a way as to maximize the value of their investment. Some of those who look for a reason why affordable housing is scarce in their community may consider looking in the mirror.
  - Fjolsvith 8y ago
    Exactly. The wealthy landlords in our small rural community vetoed a Walmart, vetoed a community college and continually try to prevent new home construction.
- ben_w 8y ago
  It’s complicated. Sure, there is way more space than people if we want it, but a surprisingly large number want to live in the same few places. If many want to live in Manhattan, and they do, you’ve only got Manhattan to fill up and then the prices rise, which they did.
- shard972 8y ago
  > housing costs could be flat or even decrease if we simply increased supply dramatically I have a feeling places like SF and NY have already tried this. Considering most of these foreign investors are most interested in these two cities over lets say Nebraska, it's hard to see how NY just needs to "build more supply" is a solution. > If we had policies that encouraged always building We have those in Australia, it's called negative gearing. We also have the most expensive houses when compared to average income and our cities have taken your advice and started to build up at rapid paces. Still hasn't worked. The Aus government is now suggesting we lower our immigration cap from 1% of total pop yearly so maybe that will help.
  - GlennS 8y ago
    Not sure negative gearing is actually intended to increase house building? Isn't it just a strange (legal) tax loophole which enough people take advantage of that it's difficult to get rid of politically?
    - goodcanadian 8y ago
      Well, it likely increases housing prices by reducing the effective cost of leverage.
- ShorsHammer 8y ago
  You don't even need to build up. There's plenty of land at current densities, it's zoning and people with guns/legal authority that prevent others from building where they want to.
basementcat 8y ago
Higher real estate prices in the USA generally mean more money for schools, libraries and other local government services.
- acjohnson55 8y ago
  Not so great if you can't afford to live in the most economically advantageous parts of your country.
- deleted 8y ago
  [deleted]
- ben_w 8y ago
  It also makes those things more expensive, both for the property those services occupy and for the cost of paying high enough salary to attract necessary staff. Also there are other forms of tax besides property tax, so governments don’t need expensive property to fund their services.
- pound 8y ago
  Not with Prop 13 in California..
addicted 8y ago
WHich is something that is completely controllable, as the Vancouver example you point to. Irrespective of whether that’s a good thing or not, the point is, the problems with real estate investments isn’t because of the trade deficit, but because the US doesn’t take any steps to prevent the money being invested in real estate.

ajross 8y ago

> I always thought that for a country with the World’s reserve currency, the USA ought to maximize its trade deficit instead of worrying about reducing it Indeed. That was basically post-war US economic policy in a nutshell. The worrying about reducing the trade deficit is a purely political argument. Trump is simply the first person in power to actually believe the nuttery.

smokeyj 8y ago

Venezuela tried that. Now they have petro coin.

basementcat 8y ago
Venezuela doesn’t control the world’s reserve currency.
- mehwoot 8y ago
  Neither would the U.S. if they had hyper inflation.
  - vkou 8y ago
    It's almost as if there is no middle ground between zero percent inflation, and worthless-trillion-dollar-bill hyperinflation.

polotics 8y ago

Well this used to be true. However the Eurodollar futures selloff started. All bets are off.