Donald Trump ran for president largely on a promise to reduce the trade deficit, specifically with China. But the new report shows a 10-year record high trade deficit. Why doesn’t President Trump admit that trade deficits are largely a fiction, and it’s his booming economy that makes a “really really great, huge one” possible?
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Trump Trade Deficit Breaks 10-Year Record: Why Not Declare Victory?
Donald Trump ran for president largely on a promise to reduce the trade deficit, specifically with China. But the new report shows a 10-year record high trade deficit. Why doesn’t President Trump admit that trade deficits are largely a fiction, and it’s his booming economy that makes a “really really great, huge one” possible?
12 replies on “Trump Trade Deficit Breaks 10-Year Record: Why Not Declare Victory?”
I remember watching a Sean Connery / Wesley Snipes movie (and a better underlying book) about our huge trade deficit. Or that other documentary, Die Hard.
Are we still owned by the Japanese?
When/if (really, when) the interest on the American debt held by other countries stops being paid then these other countries will no longer want to buy/hold American dollars. At that point the (digital) printing machines that churn out American debt will be ‘pushing on a rope’ and will have to be turned off to avoid massive inflation. If inflation is to be avoided, the American government will no longer be able to pay for its various programs by ‘printing’ money. It’s a dark cloud with a silver lining.
Some countries have already left, or are considering leaving the US fiat currency standard. How about having all government bureaucrats and congressmen take the Dave Ramsey program as part of their CE requirement? Spending other people’s money is a drug. There was a time, long ago, when government stewards wouldn’t dream of purchasing anything on CREDIT – CREDIT, the cancer and bane of the American negative equity household and the 22+ TRILLION debt.
Does the money that Tide saves mean that Tide can make more Tide Pods available to younger people at a lower price?
Really great show, guys. Economics is truly a dismal science because wealth is mostly perception. Example: a person has an old car. To one customer, he can get $500 for it. To another, it’s a rare collectible, and he’s happy to pay you $5,000 for it. You sell it to him, and go use your new cash stash to assemble a new type of ATV out of some parts you get with a couple clicks from Amazon, and sell it to somebody else for $25,000.
So what was your old car really worth? Surely a weekend’s work isn’t worth $24,500? (yes, Bill, your example was better.)
Currency is a fungible commodity. Go ahead and print up as much as you like, and trade it for something tangible. The wealth is in the asset, whether the asset is an idea, an object, or in the perceived value of your dollar. You can trade them around freely.
Just don’t print so many of them that everybody realizes its monopoly money. That moment is when the crash happens. It’s purely psychological.
And yes, Scott, Trump should go spin this news and make hay out of it. He wouldn’t be wrong.
This ties in nicely with a post I made yesterday, here.
Newly ‘minted’ (haha!) money has to be injected into the economy at some point. The people/businesses/state-entities at this point get the benefit of the extra money without having to pay higher prices. Eventually, prices (including wages) are bid up as the additional money (but not additional goods) works it way through the economy. The people at the end of the chain – those on fixed incomes – suffer the higher prices without compensation.
New money is injected into the system to balance the creation of actual wealth. It’s when currency is minted without any asset being created that inflation occurs. If it is done in a balanced manner, inflation is zero. If more asset is created than there is currency to trade it, the “dollar value” goes down, thus we have deflation.
It’s a delicate, balanced relationship and unfortunately it is also, due to the nature of time and the vagrancies of the flow of cause and effect, rife with opportunities for corruption and malfeasance.
Certainly, people on fixed income suffer from inflation (I’m one of them). The goal of any economy should be to create massive wealth, and print currency to match it so that everything keeps the same relative value.
The relative values of things change over time. The best that can be done is to approximate a price level through the use of ‘baskets of goods’. The contents of the baskets have to be updated as products appear and disappear.
Fortunately, inflation has been relative low in recent years. I wonder how long that will last?
My fingers are crossed.
One of the problems is that perceived value is completely elastic. My $15 painting is suddenly deemed to be worth $15,000,000 by some “authority” figure, and it moves the basket around in an uncontrollable fashion.
Trying to find an island of calm in economics is like surfing in a gale looking for a big barge to tie up to.
Hmm. It looks like it’s just you and me, bud! I’m here on the east coast of Australia where it is a lazy Sunday afternoon.
LOL. I’m sitting in a warm house surrounded by several feet of snow and am about to hit the sack to try to avoid getting totally (what’s the word? “knackered”?) screwed up by the idiot Daylight Savings Time change tonight.
There was a time – not too long ago, when the younger generation cared for the grandfolks (i.e. no medicare). Now, thanks to parental indulgence and laziness, it’s the other way around. I’m just glad we raised responsible children, who are good parents – And we thank God for the the grace to resist the temptation to intervene.