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But there is an adjustment in the total wealth owned in aggregate by those in Portugal vs. France, which is what’s important at the end of the day, right? Even

But there is an adjustment in the total wealth owned in aggregate by those in Portugal vs. France, which is what’s important at the end of the day, right? Eventually those in Portugal will not have enough wealth to import above their exports, depending on how much stored wealth they have in aggregate. So it’s still guaranteed to balance out on a century timescale…

deleted 2y ago
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s1artibartfast 2y ago
The end states are different however. >So it’s still guaranteed to balance out on a century timescale… Balance in what sense? In terms of trade, countries can perpetually run a deficit if they share a currency. Wealth isnt zero sum and is continually created. This can be used to pay a perpetual deficit at a cost to growth.
- MichaelZuo 2y ago
  Isn’t it the relative level that decides the balance between imports and exports? Not the absolute level of wealth?
  - s1artibartfast 2y ago
    relative level of what? I dont understand your question.
    - MichaelZuo 2y ago
      Relative level of wealth available for importing…
      - s1artibartfast 2y ago
        I see. Even if you have little wealth, I dont mind taking it all. It just means you cant buy much. Imagine of two families. Whenever one gets money, it buys food from the other. The 2nd keeps taking the money and investing in their garden, making it bigger and more efficient. IF they share a currency,
        MichaelZuo 2y ago
        How can their be a ‘perpetual deficit’ in this case? Or in the case of Portugal and France trading? Eventually one party will exhaust all their available resources, be that money, gold, desirable trade goods, trust, credibility, etc… and won’t be able to run a deficit anymore.
        s1artibartfast 2y ago
        Countries continually produce new value. If one party has a gold mine, or scientists, or workers, or anything that produces net positive value, it generates wealth. If you retain that wealth and reinvest it, it can compound and this is called economic growth. Lets say you, with your human labor, can use 10 bricks to produce 20 bricks. If you do this every year, your wealth grows. first 10, then 20, then 40, then 80, ect. In this senario, You can trade with your neighbor and run a 10 brick deficit every year, but you wont exponentially grow your production and wealth. You will have 10 the first year, make 20, trade away 10, then end up where you started. You are sustainable forever, but not growing. Your house will remain small, and the house of your trading partner will grow ever larger.
        MichaelZuo 2y ago
        Yes… but these Portugese bricks have to be somehow better, in some aspect, than French bricks, for them to be traded in the first place. Be that quality, quantity, availability, pricing, etc… Eventually Portugal will exhaust all it’s bricks, and future brick opportunities, that are better in some aspect, relative to French bricks and French future brick opportunities. And when that happens with every possible thing and opportunity in Portugal, relative to French things and opportunities, then the trade deficit naturally disappears.

deleted 2y ago

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s1artibartfast 2y ago

The end states are different however. >So it’s still guaranteed to balance out on a century timescale… Balance in what sense? In terms of trade, countries can perpetually run a deficit if they share a currency. Wealth isnt zero sum and is continually created. This can be used to pay a perpetual deficit at a cost to growth.

MichaelZuo 2y ago
Isn’t it the relative level that decides the balance between imports and exports? Not the absolute level of wealth?
- s1artibartfast 2y ago
  relative level of what? I dont understand your question.
  - MichaelZuo 2y ago
    Relative level of wealth available for importing…
    - s1artibartfast 2y ago
      I see. Even if you have little wealth, I dont mind taking it all. It just means you cant buy much. Imagine of two families. Whenever one gets money, it buys food from the other. The 2nd keeps taking the money and investing in their garden, making it bigger and more efficient. IF they share a currency,
      - MichaelZuo 2y ago
        How can their be a ‘perpetual deficit’ in this case? Or in the case of Portugal and France trading? Eventually one party will exhaust all their available resources, be that money, gold, desirable trade goods, trust, credibility, etc… and won’t be able to run a deficit anymore.
        s1artibartfast 2y ago
        Countries continually produce new value. If one party has a gold mine, or scientists, or workers, or anything that produces net positive value, it generates wealth. If you retain that wealth and reinvest it, it can compound and this is called economic growth. Lets say you, with your human labor, can use 10 bricks to produce 20 bricks. If you do this every year, your wealth grows. first 10, then 20, then 40, then 80, ect. In this senario, You can trade with your neighbor and run a 10 brick deficit every year, but you wont exponentially grow your production and wealth. You will have 10 the first year, make 20, trade away 10, then end up where you started. You are sustainable forever, but not growing. Your house will remain small, and the house of your trading partner will grow ever larger.
        MichaelZuo 2y ago
        Yes… but these Portugese bricks have to be somehow better, in some aspect, than French bricks, for them to be traded in the first place. Be that quality, quantity, availability, pricing, etc… Eventually Portugal will exhaust all it’s bricks, and future brick opportunities, that are better in some aspect, relative to French bricks and French future brick opportunities. And when that happens with every possible thing and opportunity in Portugal, relative to French things and opportunities, then the trade deficit naturally disappears.