4 ms·
Yellen Warns China Against Flood of Cheap Green Energy Exports
- Bostonian 3y agoBoth Biden and Trump ignore that cheap imports raise Americans' standards of living. Ultimately the purpose of trade is get stuff from other countries. Trade would be foolish if you forever ran trade surpluses and thereby got less stuff from other countries than you produced for them.
- chiefalchemist 3y agoYes and no. Trade is good. Trade imbalance (i.e. more imported than exported), not good. When money leaves the country that money can't be used within the country. For example, the USA's longer running imbalance has financed the development of other country's industries, and hollowed out the USA. You don't raise a standard of living simply by importing cheap shit. In the short term, it might appear a positive, but over the longer term it's a false god.
- fspeech 3y agoYou can't finance other countries by running a trade deficit. For example through the Marshall plan US ran a larger trade surplus than otherwise possible to help other countries rebuild. That's an example of financing others. The US trade deficits do provide other countries a different public good, namely a common medium of exchange, a.k.a. currency. In turn other surplus economies are financing the US. How sustainable it is depends on the interest rate. Right now it is close to being not sustainable due to the high (real) interest rate.
- chiefalchemist 3y agoSuatained deficits of significant imbalance is unsustainable. Interest rates further exasperate that flaw in the system.
- fspeech 3y agoThe real interest rate was zero or slightly negative for a long time. It only turned positive in the last two years.