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Lol, the US deficits are what sustains the production of demand stricken surplus economies. Everything that has happened is the ultimate result of surplus count

Lol, the US deficits are what sustains the production of demand stricken surplus economies. Everything that has happened is the ultimate result of surplus countries doubling down on mercantalist investment than growing internal consumption. If a rebalancing were to occur, it is the surplus countries hit with mass unemployment that will hurt much more than deficit countries that can move production back at a much quicker pace. The author is making the mistake of viewing tings from a supply side perspective when given excessive reliance on investment and high savings the world is constrained by chronic underconsumption.

tmountain 10mo ago
So, America is great at consuming, but if ratio of debt to GDP continues to grow, it's unsustainable for the U.S. Sure, China needs the U.S. to be a major customer, but it doesn't seem like things can continue as they're going now, especially as the willingness to ignore the extremity of the debt is largely based on good faith and credibility.
next_xibalba 10mo ago
Why assume rebalancing is mainly a demand problem but not a (slow) supply-constrained adjustment driven by demographics, capital stickiness, and institutional limits (in deficit countries)?
- corimaith 10mo ago
  Read Michael Pettis
  - AnimalMuppet 10mo ago
    Could you be a bit more specific?
vdupras 10mo ago
It's a trade imbalance. They send stuff out, they get nothing in. They could just continue to produce the stuff, then just set it on fire. No mass unemployment. Problem solved, no? It seems easier to do than to build an industrial base again.
- corimaith 10mo ago
  Yeah, try building a product nobody wants and let's see how long you stay solvent... Brush up on macroeconomics first maybe
  - vdupras 10mo ago
    That's why I said "set it on fire". This whole economic speak is just a cover to avoid saying that trade imbalance is a fealty payment to the US. It's ridiculous to say that a country that was previously sending out stuff for free to the US would suddenly have a big existential problem when they suddenly don't have to do it anymore. They will have other problems due to a changing world order, that's for sure, but figuring out what to do with that production won't be one of them.
    - corimaith 10mo ago
      >for free to the US would suddenly have a big existential problem No they're not sending it for free, the US dollars and IOUs are real and ultimately translated into maintaining the salaries of millions of factory workers. Thats the whole point of export driven growth. Trying to abstract away the balance sheet as imaginary is not how real economics works. The CCP, the IMF, World Bank, BIS, etc certainly aren't thinking like you are, growing consumption has proven extremely difficult in practice over growing industry.
      - vdupras 10mo ago
        That "consumption" is such a difficult thing to do is a preposterous idea, since you can always set things on fire. These theories are all make believe. I mean, what makes american so special in their ability to consume? An african can watch football on their 54" TV just as well as an american. Just ship this crap there instead of in the US if you're so concerned about consuming it. It's trade imbalance! You ship stuff, and the IOUs you get in return are never claimed. It's no better than shipping stuff in Africa and getting Zimbabwean money in return. Everyone knows that it can't be claimed for anything tangible, except from other countries who also owe fealty to the US and are forced to give this currency value. If everyone "asked" for something in return of those IOUs from the US itself, they'd get nothing of tangible value in return. These IOUs only have value insofar as the US is the world police.
pjc50 10mo ago
It is difficult to see how in an environmental crisis the problem is under consumption of finite resources.

tmountain 10mo ago

So, America is great at consuming, but if ratio of debt to GDP continues to grow, it's unsustainable for the U.S. Sure, China needs the U.S. to be a major customer, but it doesn't seem like things can continue as they're going now, especially as the willingness to ignore the extremity of the debt is largely based on good faith and credibility.

next_xibalba 10mo ago

Why assume rebalancing is mainly a demand problem but not a (slow) supply-constrained adjustment driven by demographics, capital stickiness, and institutional limits (in deficit countries)?

corimaith 10mo ago
Read Michael Pettis
- AnimalMuppet 10mo ago
  Could you be a bit more specific?

vdupras 10mo ago

It's a trade imbalance. They send stuff out, they get nothing in. They could just continue to produce the stuff, then just set it on fire. No mass unemployment. Problem solved, no? It seems easier to do than to build an industrial base again.

corimaith 10mo ago
Yeah, try building a product nobody wants and let's see how long you stay solvent... Brush up on macroeconomics first maybe
- vdupras 10mo ago
  That's why I said "set it on fire". This whole economic speak is just a cover to avoid saying that trade imbalance is a fealty payment to the US. It's ridiculous to say that a country that was previously sending out stuff for free to the US would suddenly have a big existential problem when they suddenly don't have to do it anymore. They will have other problems due to a changing world order, that's for sure, but figuring out what to do with that production won't be one of them.
  - corimaith 10mo ago
    >for free to the US would suddenly have a big existential problem No they're not sending it for free, the US dollars and IOUs are real and ultimately translated into maintaining the salaries of millions of factory workers. Thats the whole point of export driven growth. Trying to abstract away the balance sheet as imaginary is not how real economics works. The CCP, the IMF, World Bank, BIS, etc certainly aren't thinking like you are, growing consumption has proven extremely difficult in practice over growing industry.
    - vdupras 10mo ago
      That "consumption" is such a difficult thing to do is a preposterous idea, since you can always set things on fire. These theories are all make believe. I mean, what makes american so special in their ability to consume? An african can watch football on their 54" TV just as well as an american. Just ship this crap there instead of in the US if you're so concerned about consuming it. It's trade imbalance! You ship stuff, and the IOUs you get in return are never claimed. It's no better than shipping stuff in Africa and getting Zimbabwean money in return. Everyone knows that it can't be claimed for anything tangible, except from other countries who also owe fealty to the US and are forced to give this currency value. If everyone "asked" for something in return of those IOUs from the US itself, they'd get nothing of tangible value in return. These IOUs only have value insofar as the US is the world police.

pjc50 10mo ago

It is difficult to see how in an environmental crisis the problem is under consumption of finite resources.