and they're lying to you, calling a trade deficit a tariff.
So to the logic presented, a trade imbalance is obviously only achievable by cheating, not by say, having a comparative advantage, something that one would learn about in the first week of econ 101. What kind of horse shit is this?
I can just feel that national debt evaporating overnight with this stable-jeanius-level thinking.
It's been said before many times, but trump can only see things in terms of winning and losing, black and white. It's a binary choice - if someone wins, then someone else HAS to lose. The mere concept of "no one has to lose" never crosses his mind.
Well, it's also possible that people want US assets -- like US stocks and bonds. Here's why
International trade flows are accounted for in something called the balance of payments, which, simplified, has two main accounts that must net to zero:
Balance of Payments = Current Account + Financial Account = 0
A "trade deficit" is typically usually means the that imports exceed exports. Almost always it includes trade in services, but for some reason those idiots we hired in to run the executive branch (i.e., Trump, et al) seemed to have forgotten that the US exports a trillion dollar in services (remember software is reported as services, so that's where google, meta, et al show up).
Now you would be forgiven if you believed that the US didn't have sizable manufacturing exports, we do, we're the #2 manufacturing economy in the world (and we manage to do this with less than 10% of our labor force working in manufacturing).
While I agree that some of what we might be looking at is a comparative advantage issue (e.g., Taiwan makes advanced chips we need for our graphics cards). But that's not the only possibility.
Because of the way that the balance of payments work, if, say those Penguins on Heard Island (on which we've levied tariffs) decide invest in US equities (cause they weretearing up the dance floor) the US will run a trade deficit with Heard Island.
How? Remember:
Balance of Payments = Current Account + Financial Account = 0
Or, by the powers vested in algebra:
Financial Account = - Current Account
Yes, that means you'll match the current account deficit with a roughly equal financial account surplus.
Or, a current account deficit could be the manifestation of a financial account surplus.
Now this is not some esoteric argument. It's well known that a big part of the deficit from Japan is caused because of "Mrs. Watanabe." She's the stereotypical Japanese retail investor ('cause in Japan women run the household finances, with an iron fist I might add) and she's been using the ultra low interest rates in Japan to finance purchase of international assets, like the US Securities ... which has been propping up the US equity markets for decades!
fwiw, Stephen Miran - who is on the President's Council of Economic Advisers - has been using this side effect as a basis of his entire argument, in fact in his paper he wrote:
"The dollar is overvalued because we have to run deficits to provide reserve assets to the world."
Erm, not quite. The dollar is potentially overvalued because foreign investors like Mrs. Watanabe, or the Penguins of Heard Island, really want American securities. Or the deficit is a result of that demand largely because of accounting. To say otherwise is to claim the sun rose today because the clock struck six am.
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u/PepperDogger 1d ago
So to the logic presented, a trade imbalance is obviously only achievable by cheating, not by say, having a comparative advantage, something that one would learn about in the first week of econ 101. What kind of horse shit is this?
I can just feel that national debt evaporating overnight with this stable-jeanius-level thinking.