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Reply to "Yuji officially endorses Donald Trump. Who is supporting Grandma Hillary ?"

Kari posted:
 

 

Okay - you're right, strictly speaking. I was tying the overall importance of the merchandise trade deficit to net income flows. The US running  merchandise deficits year after year works as a locomotive for the global economy.

I think that you meant to say balance of payment deficits, where capital net inflows/outflows are considered.  The USA does benefit from foreign investment (portfolio and real assets), which finances any deficits (trade deficits and payments such as interest, dividends, and repatriations to foreign owners).

The US dollar remains the reserve currency, and the USA is seen as the world's most stable economy.  So all those screams from all 3 GOP clowns that the USA is in dire straights look like serious hysteria of a lunatic fringe.  When last have we heard any queries from the EU zone or China that there ought to be a reserve currency other than the US$?

Yes US trade deficits do act as an engine of growth for the global economy, as we have the largest consumer market.  That was the source of China's 10% real growth, which they attained.  High Chinese growth also pulled along commodity producers. Interestingly a slower US economy, with reduced consumption, has slowed Chinese growth, which has dumped Brazil into a recession.

When Bernie, Trump, and Cruz are done with their protectionism, to their chagrin MORE US workers will be unemployed, as other countries retaliate, and as compressed margins, due to the higher cost of imports, result in lower wages, or increased automation, to reduce labor costs.

The lower end of the consumer chain  (Walmart, Costco, etc.) requires cheap imports, so how will Americans react when prices increase by 25%?

What Bernie, Trump, and Cruz need to investigate is why Germany, a smaller economy than the USA, exports all most as much as we do by value. Airbus will be very happy as countries, angered by US protectionism, retaliate by banning Boeing purchases.  Ditto for Caterpillar, etc.

FM
Last edited by Former Member
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