I am not sure why you are talking about hyperinflation. This thread is about trade deficits. You know that a trade deficit and a government budget deficit are two very different things, right?
Reduce the trade deficit; increase GDP & median wage
- Thread starter Supposn
- Start date
I am not sure why you are talking about hyperinflation. This thread is about trade deficits. You know that a trade deficit and a government budget deficit are two very different things, right?
You are talking about hyperinflation (what happened in Zimbabwe) which is usually the result of governments inflating their currencies to pay off their debts. All of that is different than the topic of this thread, which is a trade deficit. A trade deficit is when imports exceed exports in an economy.
NO! A trade deficit IS NOT the same as a government budget deficit.
All deficit means is how much something falls short. It can be applied to many things.
A government budget deficit has NOTHING to do with a trade deficit.
we were discussing trade deficit and surplus. we were not discussing government budget deficit.
trade deficit if it continue will lead to poverty then it will lead to hyper inflation . it can't lead to any thing constructive .you can't have any thing for nothing your money will be excepted only if it was backed up by product or gold . as a matter of fact you might have a bigger problem than Zimbabwe . at least Zimbabwe can print worthless money and use it locally you can't because the dollar now is the only currency in the globe and every other currency it tied or tethered to it and no body will let go . so when you print automatically the world print .
trade deficit if it continue will lead to poverty then it will lead to hyper inflation . it can't lead to any thing constructive .you can't have any thing for nothing your money will be excepted only if it was backed up by product or gold . as a matter of fact you might have a bigger problem than Zimbabwe . at least Zimbabwe can print worthless money and use it locally you can't because the dollar now is the only currency in the globe and every other currency it tied or tethered to it and no body will let go . so when you print automatically the world print .
Explain how.
What are you talking about? Why do you keep bringing up Zimbabwe? Their problems were a result of hyperinflation caused by monetary policy to cover shortfalls in the government budget because of a large GOVERNMENT BUDGET DEFICIT. It had little to do with a trade deficit (I am not even sure if they were running a trade deficit). You are the one that keeps bringing up a government budget deficit (although inadvertently), because apparently you don't understand the difference.
government budget , but a small part of the hole economy. and yes like any thing else , it can lead to hyperinflation because governments print there way out of budget deficit instead of cutting expenditures or raising revenue or borrowing there way out . regardless of the cause of this budget deficit . printing and risking hyperinflation is the last medicine or drug . have the economy as hole was runing a trade surplus .this wouldn't happen . because this surplus will reflect on government revenue .or on the production unit revenue . or some other part of the economy .
AS to how trade deficit leads to poverty ; it is because you have to pay for this deficit it will not be free . how would you pay for it ? or to be precise how did you pay for it . sold the family jewelry ? or soled a kidney ? or what ? . obviously you have never thought of the dependencies and interconnections . http://www.google.com.sa/search?hl=...ld+the+family+jewelry&spell=1&biw=939&bih=455
AS to how trade deficit leads to poverty ; it is because you have to pay for this deficit it will not be free . how would you pay for it ? or to be precise how did you pay for it . sold the family jewelry ? or soled a kidney ? or what ? . obviously you have never thought of the dependencies and interconnections . http://www.google.com.sa/search?hl=...ld+the+family+jewelry&spell=1&biw=939&bih=455
I am sorry, but I am done here. You clearly do not understand what trade deficit means or what causes hyperinflation or how a trade deficit and a budget deficit are very different things.
In a trade deficit, you don't necessarily accumulate debt
I suggest you learn a bit more before trying to argue for one point or another because the reality is you have little to no idea of what you are talking about.
In a trade deficit, you don't necessarily accumulate debt ?
sure but you payed for it . just figure this out and tell us were the payment came from and tell me why the financial market did not correct it self and had to be bailed out ?
it's you who is talking nonsense . obviously you can't see the dependencies and interconnections of various part of an economy .
sure but you payed for it . just figure this out and tell us were the payment came from and tell me why the financial market did not correct it self and had to be bailed out ?
it's you who is talking nonsense . obviously you can't see the dependencies and interconnections of various part of an economy .
Do you ever buy anything at the store? You spend money to buy it right? If you answered yes to both these and think that you HAVE TO accumulate debt to do those things, I don't know what to tell you because that is exactly what you are claiming in your argument. And even then, it is the market that would be doing the spending and NOT GOVERNMENT, so hyperinflation has NOTHING to do with it.
I can do that ether by using my credit card or by borrowing from some one .
Look ; there is only one situation when a country can run a trade deficit and get away with it . that is ; if this deficit is equal to and paid for by foreign aid then it will list as import but it will not harm the economy .
bare in mind that you are the one who wanted this example of me and the store as an illustration or a simulation to the trade deficit and this only illustrate a partial aspect . a more closer illustration to consider me and my extended family as a country we as a unit produce and consume . some of our product is exported to other families and some of our consumption is imported from other families . the rest is produced in house . some times we have a trade surplus some other we have trade deficit . these days for many reasons we are having deficit more often . our imports are 3% higher than our export . last month we payed for this deficit with the last penny of our saving from the surplus days . can you come up with a solution ? please help .!
Last edited:
I can do that ether by using my credit card or by borrowing from some one .
Look ; there is only one situation when a country can run a trade deficit and get away with it . that is ; if this deficit is equal to and paid for by foreign aid then it will list as import but it will not harm the economy .
bare in mind that you are the one who wanted this example of me and the store as an illustration or a simulation to the trade deficit and this only illustrate a partial aspect . a more closer illustration to consider me and my extended family a country we as a unit produce and consume . some of our product is exported to other families and some of our consumption is imported from other families . the rest is produced in house . some times we have a trade surplus some other we have trade deficit . these days for many reasons we are having deficit more often . our imports are 3% higher than our export . last month we payed for this deficit with the last penny of our saving from the surplus days . can you come up with a solution ? please help .!
A solution for what? You are effectively trading paper for goods. BOTH have value, do they not? And if you didn't think the goods had more value for the paper you would never have traded it, so you are effectively increasing your utility. Part of that increased utility will most definitely be increased productivity as you get to buy more than you otherwise would had you bought everything domestically. This gives you more money to buy more things further increasing utility or to invest, further helping the market.
Take an anecdotal example if it makes it easier to understand. Your same family owns a clothing store and usually buys a month's inventory domestically for $100, leaving you with an annual monthly profit of $50 after the purchase. A company in China offers the same product for $50 so you switch to them. You now have $100 in profit, selling the same thing for the same amount. Except you now have $50 more which you spend in the economy or keep in a bank which will lend it out. Either that, or you reduce prices for your customers, which might even lead to a higher profit depending on the market equilibrium. You call this a bad thing?
Noooo my family do not own a clothes store and do not import from china I'm a handy man and I fix thing like dishwashers , faulty faucets and so on . my wife is a good coock so she takes some of the little money we get for our exports and buy grocery with it she prepare a lot of good foods for us and sell some but you see we cant generate enough export to meet our import we need your help so we import more than we export with out borrowing . or if you prefer your first example how can I import (buy) from the store with out money and if that all is crazy talk , throw it all away and let us stick to the abstract trade deficit as you understand it how The USA is paying for it since it is there since 1985 .
You are all over the place. It was a hypothetical example. I don't know why you are applying your personal financial situation to determining what is good for the entire economy though. That aside, a trade deficit does not necessarily mean anyone has to go into debt. In fact, for some it might even save them from accumulating debt with cheaper goods.
Either way, I get the feeling that you think all debt is bad. If so, you are rejecting the idea that there is time value to money- something that is proven and most definitely true.
You really don't understand trade. Thank god that even the countries that you praise like Sweden understand and allow it more than you would.
What do you mean? Whoever BUYS the goods is PAYING for it.
So are you just against trade? Ironically you still buy food, housing, clothing, internet, etc. don't you? What do you propose instead?
if country a import x amount of x materials and pay $100 and and export x amount of x materials and receive only $90 how this country economy get the money to pay for the continuously $10 deficit . this is my question . don't slap me with the utility and value crape , save it to the supply and demand discussion .
Show me where I said any thing that comprise being against trade . that is an incorrect conclusion . All I'm against in this thread is a country running a trade deficit continuously .
As to what I propose ; I propose instead exporting more and aiming to $0 deficit as a minimum . if you can't eliminate the deficit cut down on imports and produce more even if you have to throw WTO to the same dust bin , were Bretton Woods system went .I'm not against the WTO
And I'm against negative economical activities and restrict the banks to financing production and trade with only real tangible product . No more funny bonsi scheme-like CDO , the FEDs has to be replaced with a central bank .
Well it isn't crap (it is the subjective theory of value) and you clearly misunderstand what the trade deficit is. Again. It isn't going to be the same exact materials being traded back and forth. Furthermore, on a net basis you are trading PAPER for TANGIBLE GOODS. You also disregard the fact that the imported goods might increase productivity so that NET production is potentially HIGHER than had it been without the deficit- to a point where the advantage is even greater than the irrelevant import-export gap.
You said and I quote, "therefor I don't understand trade . sure some people will make money but who will lose money . sure someone will profit from gambling , but some will lose ."
I explained why a trade deficit isn't inherently a bad thing above.
Production and trade has speculation in it and it is SUBJECTIVE. Some investments fail, others don't- no one knows for sure to begin with which will go which way. CDOs also aren't inherently bad- I am sure you are fine with trading mortgages, so that was another way.