4 ms·

The balance of payments is always self-stabilizing. The trade component can only have a non-zero integral when somebody is injecting or removing money from the

The balance of payments is always self-stabilizing. The trade component can only have a non-zero integral when somebody is injecting or removing money from the economy by some other means. What really means that no, economical dead zones have no relation at all with the balance of trade. And also, the balance of trade predicts almost nothing and is controllable by policy, anybody focusing on it is just throwing a red herring and hopping people don't look at actually important things. (What doesn't mean that currency unification doesn't cause dead zones. I know that this explanation is wrong, I don't know if it happens or not.)

whatshisface 2y ago
>The trade component can only have a non-zero integral when somebody is injecting or removing money from the economy by some other means. People late in their careers are buying imports, people early in their careers are leaving the country. That's as clear of a case of the integral going negative as I can imagine.
- marcosdumay 2y ago
  "By some other means" literally means that how people trade can't impact the balance. People leaving the country carrying money is an example of those "other means", people buying imports isn't. Either way, it's a bad number to even look at. It meaningless.
s1artibartfast 2y ago
>when somebody is injecting or removing money from the economy by some other means. Which should be considered the normal state for an economy that with growth and production. The issue is that a negative trade deficits are sustainable, but come directly out of the wealth growth of the importing country. If you have $2 of value per year, and loose net $1 across the boarder, you never accumulate wealth.
- whatshisface 2y ago
  That's a little flattened because oftentimes that $1 will go across the border in exchange for ownership of foreign assets.
  - s1artibartfast 2y ago
    Yes, but the principle is the same for how a perpetual deficit can be maintained. A subsistence farmer can grow enough for themselves. It they make extra each year, they can buy something from outside each year, continually running an import deficit.
- marcosdumay 2y ago
  Wealth is not money. No country accumulates money in any significant way. Neither loses it.
  - s1artibartfast 2y ago
    What are you talking about? Countries create and change the amount in circulation all the time.
    - marcosdumay 2y ago
      No country accumulates external money. The Eurozone ones surely don't, because people mostly don't accumulate money (your bank doesn't hold a lot of it), and the ones that have their own money don't accumulate any impactful amount of reserves because those are expensive.
      - s1artibartfast 2y ago
        Im not sure how this relates to my point. Im talking about wealth, GDP, capital, and trade. These things are measured in currency, but saying a country is hording a currency. If country A uses all of its surplus production beyond subsistence to import alcohol from country B, and country B invests all that money on education, infrastructure, and productive capital, you would expect different outcomes. Country A can humm along with a perpetual trade deficit forever, but there is an opportunity cost.

whatshisface 2y ago

>The trade component can only have a non-zero integral when somebody is injecting or removing money from the economy by some other means. People late in their careers are buying imports, people early in their careers are leaving the country. That's as clear of a case of the integral going negative as I can imagine.

marcosdumay 2y ago
"By some other means" literally means that how people trade can't impact the balance. People leaving the country carrying money is an example of those "other means", people buying imports isn't. Either way, it's a bad number to even look at. It meaningless.

s1artibartfast 2y ago

>when somebody is injecting or removing money from the economy by some other means. Which should be considered the normal state for an economy that with growth and production. The issue is that a negative trade deficits are sustainable, but come directly out of the wealth growth of the importing country. If you have $2 of value per year, and loose net $1 across the boarder, you never accumulate wealth.

whatshisface 2y ago
That's a little flattened because oftentimes that $1 will go across the border in exchange for ownership of foreign assets.
- s1artibartfast 2y ago
  Yes, but the principle is the same for how a perpetual deficit can be maintained. A subsistence farmer can grow enough for themselves. It they make extra each year, they can buy something from outside each year, continually running an import deficit.
marcosdumay 2y ago
Wealth is not money. No country accumulates money in any significant way. Neither loses it.
- s1artibartfast 2y ago
  What are you talking about? Countries create and change the amount in circulation all the time.
  - marcosdumay 2y ago
    No country accumulates external money. The Eurozone ones surely don't, because people mostly don't accumulate money (your bank doesn't hold a lot of it), and the ones that have their own money don't accumulate any impactful amount of reserves because those are expensive.
    - s1artibartfast 2y ago
      Im not sure how this relates to my point. Im talking about wealth, GDP, capital, and trade. These things are measured in currency, but saying a country is hording a currency. If country A uses all of its surplus production beyond subsistence to import alcohol from country B, and country B invests all that money on education, infrastructure, and productive capital, you would expect different outcomes. Country A can humm along with a perpetual trade deficit forever, but there is an opportunity cost.