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Rail Baron
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Originally Posted by pan6467
Let's make this simple. I'm the government I contract you to build a bridge for $240 Million. Now as you build that bridge I pay you, but I don't have enough money, so I print more money to pay you, I thereby create inflation, and decrease the buying power of that dollar I just paid you. So in the end that $240 million is only worth $200 million, yet you still have $240 million worth of bills, so you lose $40 million but I paid you the whole amount. (That is because you bidded based on prices being at a certain level, however with inflation the product you had to buy went up, but your contract value went down so you take a loss.)
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Wrong. I have bills for $240 million. The government prints up my $240million and pays me with it. That money may have less purchasing power than it did before I was paid, but I still have $240 million in cash. My bills are for $240million, I can pay them with the newly printed $240million just fine, no matter what it is worth. Inflation hits all of us. The debtor and the creditor. My $240 million today may just be worth $200 million yesterday, but my $240 million bill is now a $200 million bill. Understand? Cash is Cash. I'm not saying inflation doesn't matter, I'm saying that as long as the bill says I owe $240million, that doesn't change according to inflation. If I have $240 million in cash I can still pay that bill. Inflation hurts when I pay my creditor the $240 million and he can only go out and buy (yesterday's)$200million worth of goods and services with that money. He can't adjust his bill based on inflation after the fact.
It also appears you don't read anything I type. You still claim people are working for less and less, yet per capita personal income is up in all but 2 MSA's in the United States. per capita personal income is UP, people are not working for less and less money. Thats just misinformation you get from watching lou dobbs. What have I told you about lou? He's full of shit.
You also keep going on about how bushys are only concerned with company profit and don't care about the tax base going overseas, you do know that when a US company profits, it is taxed here in the US? When company profits are huge, tax revenues are also huge. A US company is based in the United States, but it can still do work overseas.
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Originally Posted by pan6467
A trade deficit against another country means that you rely heavily on the other country continuing to loan you product and not asking for payment.
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You are making my hair fall out! Where did you read this? This is 100% WRONG. like I said before a trade deficit is only where you import more than you export. It is also not a Government phenomenon, but a private one. Private businesses import and export every day all day 365. They also pay for the goods with every transaction. There is NO borrowing. I cant do this anymore, obviously you don't read anything I type. Start here and maybe we'll finish this discussion another day:
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Balance of trade
From Wikipedia, the free encyclopedia.
Balance of trade figures, also called net exports (NX), are the sum of the money gained by a given economy by selling exports, minus the cost of buying imports. They form part of the balance of payments, which also includes other transactions such as the international investment position.
The figures are usually split into visible and invisible balance figures. The visible balance represents the physical goods, and invisible represents other forms of trade, e.g. the service economy.
A positive balance of trade is known as a trade surplus and consists of exporting more (in financial capital terms) than one imports. A negative balance of trade is known as a trade deficit or, informally, as a trade gap, and consists of importing more than one exports. Neither is necessarily dangerous in modern economies, although large trade surpluses or trade deficits may sometimes be a sign of other economic problems.
Factors that can affect the balance of trade figures include:
Prices of goods manufactured at home (influenced by the responsiveness of supply),
Exchange rates, and
Trade agreements or barriers
other tax, tariff and trade measures
Measuring the balance of payments can be problematic, due to problems with recording and collecting data. As an illustration of this problem, when official data for all countries in the world is added up it appears that the world is running a positive balance of payments with itself. The total reported amount of exports in the world is greater by a few percent than the total reported amount of imports. This cannot be true, because all transactions involve an equal credit or debit in the account of each nation. The discrepancy is widely believed to be explained by transactions intended to launder money or evade taxes, and other visibility problems.
Economic Impact of Balance of Trade
If the balance of trade is positive, then an economy exported more than it has imported. This may appear to be a good thing but may not always be so. An example of an economy in which a positive balance of payments is generally regarded as a bad thing is Japan in the 1990s. Because Japan had a consistently positive balance of payments, it had more currency than it could effectively invest, and it was reluctant to also offer full access to its own markets. This led to huge Japanese overseas purchases of items such as real estate, which were of questionable economic value. Furthermore, the protectionist measures that created the positive balance of trade also caused the price of goods in Japan to be much higher than they would have been had imports been freely allowed. The foreign currency Japanese companies earned overseas remained largely unconverted into yen in order to suppress the yen's value, further preventing Japanese consumers from benefiting from a vaunted "trade surplus".It is also possible for the terms of trade to be lower than before if there is an improvement in the balance of trade.
Negative balances are not necessarily terrible news, either. By economic definition, a persistent trade deficit can only exist if there is a corresponding capital surplus. Otherwise, the currency would naturally decline until the deficit were eliminated.
Popular myths about trade deficits
Very few issues in economics are misunderstood by the politicians and the public as much as the trade deficit. The metaphor of trade as some kind of battle, where surplus countries win and deficit countries lose, ignores the observation that trade is based on regional specialization. The long term theoretical push is toward equilibrium, for trade deficits and surpluses can only exist when there is an excess or lack of demand for a country's investment assets.
Debate about the American trade deficit
The United States has posted a rising trade deficit since its last surplus during its recession in 1991. Its persistence has been attributed to the dollar's role as a reserve currency, continued growth in the US economy, and the continued high demand for American investment assets. The decline in manufacturing in the United States has also affected the trade deficit.
Physical trade balance
Monetary trade balance is different from physical trade balance (which is expressed in amount of raw materials). Developed countries usually import a lot of primary raw materials from developing countries at low prices. Often, these materials are then converted into finished products, and an enormous amount of value is added. Although the EU (and other developed countries) has a balanced monetary trade balance, its physical trade balance (especially with developing countries) is negative, meaning that in terms of materials a lot more is imported than exported. That means the ecological footprint of developed countries is much larger than that of developing countries.
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"If I am such a genius why am I drunk, lost in the desert, with a bullet in my ass?" -Otto Mannkusser
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