8 ms·

I can remember when a year ago everyone agreed they were happy with consuming less and spending time with the family. Looks like that didn't last long, everyone

by zz865 5y ago

I can remember when a year ago everyone agreed they were happy with consuming less and spending time with the family. Looks like that didn't last long, everyone is out shopping again.

megablast 5y ago
Everyone?? Are you just making stuff up to argue about??
Jensson 5y ago
USA never stopped consuming, they just import more and more. Trade balance is even more negative now than before the great depression, there should be a correction happening real soon: https://tradingeconomics.com/united-states/balance-of-trade https://tradingeconomics.com/united-states/balance-of-trade
- qPM9l3XJrF 5y ago
  What sort of correction?
  - Jensson 5y ago
    On average countries has a trade balance of 0, it means that a country buys as much goods and services as it sells. USA is buying more and more goods and services without selling more, as you can see in that graph, and that has been going on for 50 years now. The correction would be that USA no longer can import goods without paying anything back, stopping all the shipment problems you have now since people no longer want to ship goods to USA. That would be a trillion worth less of raw imports per year according to the current deficit.
- asdff 5y ago
  We can't afford not to import goods. The cost of manufacturing in the U.S. are too high relative to other parts of the world. Can't do anything about that on our end of the deal short of tarriffing ourselves into total economic isolation and being forced to produce everything nationally.
  - EEMac 5y ago
    That would be terrible. /s
    - asdff 5y ago
      It really would be. There would probably be famines since this globalized race to the bottom has affected our food crops as well as manufacturing. Just within the last 10 years, a lot more of our food is imported.
  - Jensson 5y ago
    But you can't just import goods without exporting anything forever, at some point USA needs to start to deliver value back to the rest of the world. Note that the trade balance includes services like ads etc, that is the entire thing.
    - rsj_hn 5y ago
      > at some point USA needs to start to deliver value back to the rest of the world First they already receive something of value, which is our money. No one forces them to sell their stuff for our money. Nor does selling us $1 of goods entitle them to get anything above and beyond $1 of our money. They have already been paid with sufficient value. Now they must spend that dollar in America somewhere. So they have a choice a) buy some other good or service from America (trade is balanced) b) buy some American asset like a bond, share of stock, etc. Then the trade deficit goes up by $1. The world is choosing to do b). No one is forcing them to. The moment they stop doing b) and start doing a), the trade deficit will be balanced. The moment they sell their existing dollar investments and buy US goods, the trade deficit will reverse. It is their choice, not America's choice. The input of the U.S. in influencing this choice is merely the setting of interest rates. By setting rates, they determine the overall returns obtained from option b). Thus they can make option b) more attractive by raising rates, and less attractive by lowering rates. But our rates are basically zero already. Does it appear to you that the U.S. is running high interest rates in order to attract foreign investment? No, we don't really take the trade deficit into account when setting rates, we focus on inflation. Now we could take steps to change the regime and strongly discourage imports. This would be the equivalent of a) taxing foreign investment, so that there is a wedge between the interest rate obtained by foreigners and our domestic policy rate for fighting inflation. At a high enough tax, the rest of the world will collectively want to pull their money out of America, sell their dollar assets, and then buy American goods to get out from under the tax. b) Subsidizing domestic production. The problem here is that business will tend to pocket the money. Option A is the more efficient approach. Option A also attacks our status as the global reserve currency - it's about time we stop being the gold standard for the rest of the world. All of these deficits are the result of us being burdened with reserve currency status, which on the one hand gives us a lot of power to punish other nations, but on the other hand destroys the domestic manufacturing base. I look forward to the time when we are no longer the world's banker but merely any other nation that needs to run balanced trade. For that to happen, we need to make our assets unappealing to foreign purchasers.

by zz865 5y ago

I can remember when a year ago everyone agreed they were happy with consuming less and spending time with the family. Looks like that didn't last long, everyone is out shopping again.

megablast 5y ago

Everyone?? Are you just making stuff up to argue about??

Jensson 5y ago

USA never stopped consuming, they just import more and more. Trade balance is even more negative now than before the great depression, there should be a correction happening real soon: https://tradingeconomics.com/united-states/balance-of-trade https://tradingeconomics.com/united-states/balance-of-trade

qPM9l3XJrF 5y ago
What sort of correction?
- Jensson 5y ago
  On average countries has a trade balance of 0, it means that a country buys as much goods and services as it sells. USA is buying more and more goods and services without selling more, as you can see in that graph, and that has been going on for 50 years now. The correction would be that USA no longer can import goods without paying anything back, stopping all the shipment problems you have now since people no longer want to ship goods to USA. That would be a trillion worth less of raw imports per year according to the current deficit.
asdff 5y ago
We can't afford not to import goods. The cost of manufacturing in the U.S. are too high relative to other parts of the world. Can't do anything about that on our end of the deal short of tarriffing ourselves into total economic isolation and being forced to produce everything nationally.
- EEMac 5y ago
  That would be terrible. /s
  - asdff 5y ago
    It really would be. There would probably be famines since this globalized race to the bottom has affected our food crops as well as manufacturing. Just within the last 10 years, a lot more of our food is imported.
- Jensson 5y ago
  But you can't just import goods without exporting anything forever, at some point USA needs to start to deliver value back to the rest of the world. Note that the trade balance includes services like ads etc, that is the entire thing.
  - rsj_hn 5y ago
    > at some point USA needs to start to deliver value back to the rest of the world First they already receive something of value, which is our money. No one forces them to sell their stuff for our money. Nor does selling us $1 of goods entitle them to get anything above and beyond $1 of our money. They have already been paid with sufficient value. Now they must spend that dollar in America somewhere. So they have a choice a) buy some other good or service from America (trade is balanced) b) buy some American asset like a bond, share of stock, etc. Then the trade deficit goes up by $1. The world is choosing to do b). No one is forcing them to. The moment they stop doing b) and start doing a), the trade deficit will be balanced. The moment they sell their existing dollar investments and buy US goods, the trade deficit will reverse. It is their choice, not America's choice. The input of the U.S. in influencing this choice is merely the setting of interest rates. By setting rates, they determine the overall returns obtained from option b). Thus they can make option b) more attractive by raising rates, and less attractive by lowering rates. But our rates are basically zero already. Does it appear to you that the U.S. is running high interest rates in order to attract foreign investment? No, we don't really take the trade deficit into account when setting rates, we focus on inflation. Now we could take steps to change the regime and strongly discourage imports. This would be the equivalent of a) taxing foreign investment, so that there is a wedge between the interest rate obtained by foreigners and our domestic policy rate for fighting inflation. At a high enough tax, the rest of the world will collectively want to pull their money out of America, sell their dollar assets, and then buy American goods to get out from under the tax. b) Subsidizing domestic production. The problem here is that business will tend to pocket the money. Option A is the more efficient approach. Option A also attacks our status as the global reserve currency - it's about time we stop being the gold standard for the rest of the world. All of these deficits are the result of us being burdened with reserve currency status, which on the one hand gives us a lot of power to punish other nations, but on the other hand destroys the domestic manufacturing base. I look forward to the time when we are no longer the world's banker but merely any other nation that needs to run balanced trade. For that to happen, we need to make our assets unappealing to foreign purchasers.