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> You cannot import something without exporting something else. This is incorrect when your national currency happens to be the global reserve currency. All it

> You cannot import something without exporting something else. This is incorrect when your national currency happens to be the global reserve currency. All it requires is for the other country to be willing to accept dollars in payment. [ EDIT: even that's wrong. All it requires is someone being willing to accept dollars, either in payment or as part of a currency exchange. ]

Retric 2y ago
Exporting dollars is exporting something. Combine a constantly depreciating dollar with constant rates of trade and you could end up in a steady state. However, we define trade deficits to exclude financial transactions for various reasons.
- PaulDavisThe1st 2y ago
  If by "exporting something else" you include dollars then fine, but I don't believe that was what the GP was saying.
  - anigbrowl 2y ago
    I'm pretty sure it's exactly what they were saying. You cannot import something without exporting something else. That something else, in almost 100% of the situations, is dollars.
    - PaulDavisThe1st 2y ago
      Normal economics does not talk about "exporting currency". You generally buy stuff with currency, which when the seller is in another country happens to mean that dollars (probably) move across borders and thus in some odd sense the currency is exported. But this is really not what is generally said in this context. Exporting stuff normally means providing goods and services to willing buyers in other countries.
      - milesvp 2y ago
        Normal economics almost certainly does talk about exporting currency. It’s a key point in freshman macro economics, and central to modern keynseian theory. And while there are some solid alternative to keynes, I doubt that even hayak would claim that you can’t export currencies.
        PaulDavisThe1st 2y ago
        Maybe my google-fu is not that great today, but I could no reference to exporting currency online that was about the concept that paying for imports was exporting currency. I'd be happy to see a link that does.
        Retric 2y ago
        You’re not going to see it used in such terms because of how economics defines trade. However you will see examples that make it clear currency is a commodity subject to supply and demand when you look into exchange rates. https://www.investopedia.com/ask/answers/041515/how-does-balance-trade-impact-currency-exchange-rates.asp https://www.investopedia.com/ask/answers/041515/how-does-bal... Trade networks allow for stable equilibriums with no individual country having equal trade with any other county. To simplify, A on net sends money to B, and B buys stuff from C with A’s currency, C then buys stuff from A in A’s currency returning that money to A. However, people want to operate in their native currency and there are a lot more than 3 countries in the real world so you end with intermediary currency exchanges changes going on. In theory supply and demand steps in to balance things, in practice cash flows rarely actually sum to 0.
      - JumpCrisscross 2y ago
        > Normal economics does not talk about "exporting currency" International finance is almost entirely about balancing the current and capital accounts [1]. The trade deficit is just one part of the current account [2]. Zeroing out the trade balance ceteris paribus requires a change in the capital account, i.e. foreign ownership of domestic assets and/or domestic ownership of foreign assets. If we’re just reducing the current account with tariffs, that means reducing both. Necessarily. This is one of the closest things to a law economics offers because it’s based on identities. The only run-around to it is the reserve account printing domestic currency, and we know how that goes. [1] https://www.investopedia.com/ask/answers/031615/whats-difference-between-current-account-and-capital-account.asp https://www.investopedia.com/ask/answers/031615/whats-differ... [2] https://en.m.wikipedia.org/wiki/Balance_of_trade https://en.m.wikipedia.org/wiki/Balance_of_trade
  - deleted 2y ago
    [deleted]
  - mitthrowaway2 2y ago
    > That something else, in almost 100% of the situations, is dollars.
  - deleted 2y ago
    [deleted]

Retric 2y ago

Exporting dollars is exporting something. Combine a constantly depreciating dollar with constant rates of trade and you could end up in a steady state. However, we define trade deficits to exclude financial transactions for various reasons.

PaulDavisThe1st 2y ago
If by "exporting something else" you include dollars then fine, but I don't believe that was what the GP was saying.
- anigbrowl 2y ago
  I'm pretty sure it's exactly what they were saying. You cannot import something without exporting something else. That something else, in almost 100% of the situations, is dollars.
  - PaulDavisThe1st 2y ago
    Normal economics does not talk about "exporting currency". You generally buy stuff with currency, which when the seller is in another country happens to mean that dollars (probably) move across borders and thus in some odd sense the currency is exported. But this is really not what is generally said in this context. Exporting stuff normally means providing goods and services to willing buyers in other countries.
    - milesvp 2y ago
      Normal economics almost certainly does talk about exporting currency. It’s a key point in freshman macro economics, and central to modern keynseian theory. And while there are some solid alternative to keynes, I doubt that even hayak would claim that you can’t export currencies.
      - PaulDavisThe1st 2y ago
        Maybe my google-fu is not that great today, but I could no reference to exporting currency online that was about the concept that paying for imports was exporting currency. I'd be happy to see a link that does.
        Retric 2y ago
        You’re not going to see it used in such terms because of how economics defines trade. However you will see examples that make it clear currency is a commodity subject to supply and demand when you look into exchange rates. https://www.investopedia.com/ask/answers/041515/how-does-balance-trade-impact-currency-exchange-rates.asp https://www.investopedia.com/ask/answers/041515/how-does-bal... Trade networks allow for stable equilibriums with no individual country having equal trade with any other county. To simplify, A on net sends money to B, and B buys stuff from C with A’s currency, C then buys stuff from A in A’s currency returning that money to A. However, people want to operate in their native currency and there are a lot more than 3 countries in the real world so you end with intermediary currency exchanges changes going on. In theory supply and demand steps in to balance things, in practice cash flows rarely actually sum to 0.
    - JumpCrisscross 2y ago
      > Normal economics does not talk about "exporting currency" International finance is almost entirely about balancing the current and capital accounts [1]. The trade deficit is just one part of the current account [2]. Zeroing out the trade balance ceteris paribus requires a change in the capital account, i.e. foreign ownership of domestic assets and/or domestic ownership of foreign assets. If we’re just reducing the current account with tariffs, that means reducing both. Necessarily. This is one of the closest things to a law economics offers because it’s based on identities. The only run-around to it is the reserve account printing domestic currency, and we know how that goes. [1] https://www.investopedia.com/ask/answers/031615/whats-difference-between-current-account-and-capital-account.asp https://www.investopedia.com/ask/answers/031615/whats-differ... [2] https://en.m.wikipedia.org/wiki/Balance_of_trade https://en.m.wikipedia.org/wiki/Balance_of_trade
- deleted 2y ago
  [deleted]
- mitthrowaway2 2y ago
  > That something else, in almost 100% of the situations, is dollars.
- deleted 2y ago
  [deleted]