Samuel,
I have no fault to find with your analysis revised to include the
financial/capital markets. With that addition you are absolutely
right that "trade deficits" are bogus and impossible. And you gave
good and clear illustrations too.
Good luck convincing anyone else tho.
Best,
Crai
>
> They get it by borrowing (assuming the exchange rates don't change
> much).
>
In the short run they can do that, but if that were their long-term solution
it would be impossible to pay back those loans because, in the model I
presented--which is the model the protectionists accept--borrowing
Samuel Mc Kee wrote:
> So there's this gigantic and ever-growing pile of U.S. dollars (in the
> multitrillions, if we are to believe the protectionists)
"The reason why the dollar has continued to rise in the face of
large deficits is because there is a scarcity of dollars in the
world econo
While the article in question is largely political bullshit, Samuel Mc
Kee's response included the denial of the possibility of a trade deficit,
something which is little better.
The USA has a large trade deficit meaning the value of its imports is much
less than the value of its exports. This m
Samuel,
> The article also conjures up the bogeyman of the "trade deficit," which is
> an accounting gimmick used to scare the economically illiterate,
Exactly so.
> since the existence of a trade deficit using honest accounting is
> mathematically impossible.
Well, not quite. Gifts and loa
