Every Day Should Be Buy American

[PredFan]

I'll buy American if I can. I do not go looking for products that are made in the USA. I usually go for the good price on a good product.

I ALWAYS avoid anything that is "Union Made".

 

[likeabird03]

...our trade deficit subtracts from GDP. I think the facts are pretty clear.

Some people use that interpretation to support their chosen beliefs, and the rest of us first look at reality--

--and then choose beliefs that fit what is.

All you have proved is that GDP can still increase even with our trade deficit subtracting from it. However that does not change the fact that our trade deficit subtracts from GDP. Unlesss you want to reinvent the formula for GDP then you're dead wrong.

My point is that GDP growth is muted by the trade deficit.

 

[expat_panama]

...

...All you have proved is that GDP can still increase even with our trade deficit subtracting from it...

No, there's also the part where the GDP can fall even with our improving trade balance adding to it.

...GDP growth is muted by the trade deficit.

If that were true then the GDP would grow more when the trade deficit shrank, and grow less with a growing trade deficit. It doesn't, and that's also how it is in the longer term--

It doesn't have to make sense to be true. Lot's of things are hard to understand and are still the way they are. We can either look at what's happening and learn to live with it, or we can pretend we live in a fantasy.

 

[likeabird03]

No, there's also the part where the GDP can fall even with our improving trade balance adding to it.

Yes, that can happen. But only when other economic forces overpower any plus side caused by an improvement in balance of trade. A shrinking trade deficit during a downturn has an offsetting effect, which means GDP will shrink less than it otherwise would have with no improvement in trade. Just as a rising trade deficit during expansion means growth is less than it otherwise would be without rise in the trade deficit.

If that were true then the GDP would grow more when the trade deficit shrank, and grow less with a growing trade deficit. It doesn't, and that's also how it is in the longer term--

It doesn't have to make sense to be true. Lot's of things are hard to understand and are still the way they are. We can either look at what's happening and learn to live with it, or we can pretend we live in a fantasy.

Quarters where the trade deficit shrinks has a positive effect on our GDP growth, this is well documented in many GDP media releases.

 

[likeabird03]

The reason that our trade deficit has gone up during expansion is because we've become too dependent on imports in the past decade or so to satisfy our consumption. If we made more of those consumer goods here at home you would actually see stronger GDP growth. This would be for two reasons -- first, you wouldn't have the trade deficit subtracting from growth. Second - consumer spending would have a better multiplier effect in our economy as it would lead to a better ramp up in domestic production and employment, like it used to.

Until around 1999, or 2000 we never had a significant trade deficit. It's no coincidence that the expansion from 2001 to 2007 was the weakest expansion in decades. It was the first time period where our trade deficit became a big factor. Skyrocketing energy prices didn't help either, but that's mostly another story.

 

[Sundial]

And you mistake capital for trade flows. We have capital inflows. We have goods and services outflows. This must happen. They are directly related. This is another problem with this argument. If the current account is negative (i.e. we have a trade deficit), the capital account must be positive (i.e., we are importing capital). IOW, current and capital accounts were perfectly balanced, and a foreigner decides to invest in a plant in America to invest in a plant, we will - by definition - have a trade deficit. Capital coming into the country without an equal amount of capital going out requires that we will have a trade deficit. This is another reason why it is wrong to say a trade deficit is always bad. A trade deficit can arise if investors think America is a really good place to invest.

Don't you mean to say we have goods and services flowing into the country and money flowing out?

 

[Supposn]

Look at the quarterly releases of GDP, and they will usually say that the growing trade deficit subtracts from our GDP growth. You can't argue that this is positive, because higher GDP is a good thing. Net capital outflows caused by the trade deficit does not add to our GDP, it subtracts. It also costs us jobs here at home, because if that extra 50 billion dollars per month was spent on US products vs foreign products, that would increase production here at home and have a higher multiplier effect.

You miss the point.

NX does not occur in isolation. Right now, there is a negative correlation between C and NX (net exports) in the American economy (all else being equal). Usually, when NX falls, C rises, and vice versa. NX is, at least partially, an outcome. It is not a driver of GDP. When consumption and income are rising, imports are rising because demand is rising and NX is falling.

And you mistake capital for trade flows. We have capital inflows. We have goods and services outflows. This must happen. They are directly related. This is another problem with this argument. If the current account is negative (i.e. we have a trade deficit), the capital account must be positive (i.e., we are importing capital). IOW, current and capital accounts were perfectly balanced, and a foreigner decides to invest in a plant in America to invest in a plant, we will - by definition - have a trade deficit. Capital coming into the country without an equal amount of capital going out requires that we will have a trade deficit. This is another reason why it is wrong to say a trade deficit is always bad. A trade deficit can arise if investors think America is a really good place to invest.

Toro, the balance of payment accounts are a zero sum of nations’ current and capital accounts. Every entry within all of these accounts is actually or converted to a common monetary currency.

The capital account tracks international transfers of wealth. The current account tracks the global trade of goods and services.

Nations’ capital accounts are NOT factored into the calculation of GDPs.
Nations’ global trade balances, (i.e. the essence of the nations’ current accounts) ARE ALWAYS factored into their GDPs.

Although trade surpluses ALWAYS increase and trade deficits ALWAYS decrease their nations’ GDPs more than otherwise, trade balances are only one of the factors affecting GDP’s. Nations’ GDPs will rise or fall dependent upon the net effect of all factors within the GDP calculating formula.

Respectfully, Supposn

 

[Toro]

Look at the quarterly releases of GDP, and they will usually say that the growing trade deficit subtracts from our GDP growth. You can't argue that this is positive, because higher GDP is a good thing. Net capital outflows caused by the trade deficit does not add to our GDP, it subtracts. It also costs us jobs here at home, because if that extra 50 billion dollars per month was spent on US products vs foreign products, that would increase production here at home and have a higher multiplier effect.

You miss the point.

NX does not occur in isolation. Right now, there is a negative correlation between C and NX (net exports) in the American economy (all else being equal). Usually, when NX falls, C rises, and vice versa. NX is, at least partially, an outcome. It is not a driver of GDP. When consumption and income are rising, imports are rising because demand is rising and NX is falling.

And you mistake capital for trade flows. We have capital inflows. We have goods and services outflows. This must happen. They are directly related. This is another problem with this argument. If the current account is negative (i.e. we have a trade deficit), the capital account must be positive (i.e., we are importing capital). IOW, current and capital accounts were perfectly balanced, and a foreigner decides to invest in a plant in America to invest in a plant, we will - by definition - have a trade deficit. Capital coming into the country without an equal amount of capital going out requires that we will have a trade deficit. This is another reason why it is wrong to say a trade deficit is always bad. A trade deficit can arise if investors think America is a really good place to invest.

Toro, the balance of payment accounts are a zero sum of nations’ current and capital accounts. Every entry within all of these accounts is actually or converted to a common monetary currency.

The capital account tracks international transfers of wealth. The current account tracks the global trade of goods and services.

Nations’ capital accounts are NOT factored into the calculation of GDPs.
Nations’ global trade balances, (i.e. the essence of the nations’ current accounts) ARE ALWAYS factored into their GDPs.

Although trade surpluses ALWAYS increase and trade deficits ALWAYS decrease their nations’ GDPs more than otherwise, trade balances are only one of the factors affecting GDP’s. Nations’ GDPs will rise or fall dependent upon the net effect of all factors within the GDP calculating formula.

Respectfully, Supposn

The capital account - with some adjustments - is the opposite of the current account. The two make up the balance of payments. One offsets the other. They have to.

Think about it. If a country has a current account surplus, it has an excess supply of dollars because dollars are flowing outside the country. Now unless the dollars go into a vault (most do not), they have got to do something with the dollars. The only place where dollars can be used (for the most part) is in the US. So those dollars are reinvested back into America.

The flows work the same way with investment. If a French investor says "I think America is a better place to invest than France" and builds a plant in Alabama, euros come into the country. Those euros are only good in Europe, so the recipients of the euros buy goods from Europe.

That, with some exceptions, is how the balance of payments works. There is nothing inherently positive or negative about a trade balance. It is often symptomatic of the broader economy. You could run a trade surplus in America right now if you engineer a brutal recession, but that would be dumb.

 

[Wiseacre]

The problem is that foreign investors are not investing in US business, they're investing in US gov't bonds. That's good in one sense, it keeps our interest payments down on our debt, but it's also bad cuz we don't have the incentive to slow down the borrowing.

 

[EdwardBaiamonte]

The problem is that foreign investors are not investing in US business, they're investing in US gov't bonds. That's good in one sense,

Of course with the Republican Balanced Budget Amendment debt would be illegal. Then, Japan and China would have to buy our goods and services, and thus end our recession and unemployment.

Liberals are opposed because they lack the ability to understand what they are doing.

 

[likeabird03]

The problem is that foreign investors are not investing in US business, they're investing in US gov't bonds. That's good in one sense, it keeps our interest payments down on our debt, but it's also bad cuz we don't have the incentive to slow down the borrowing.

Exactly, it's called the crowding out effect, and it's just one more way our growing govt is choking the private sector.

 

[Supposn]

Look at the quarterly releases of GDP, and they will usually say that the growing trade deficit subtracts from our GDP growth. You can't argue that this is positive, because higher GDP is a good thing. Net capital outflows caused by the trade deficit does not add to our GDP, it subtracts. It also costs us jobs here at home, because if that extra 50 billion dollars per month was spent on US products vs foreign products, that would increase production here at home and have a higher multiplier effect.

You miss the point.

NX does not occur in isolation. Right now, there is a negative correlation between C and NX (net exports) in the American economy (all else being equal). Usually, when NX falls, C rises, and vice versa. NX is, at least partially, an outcome. It is not a driver of GDP. When consumption and income are rising, imports are rising because demand is rising and NX is falling. ....................

Toro, I just noticed the exaggeration in your statement “The capital account - with some adjustments - is the opposite of the current account. The two make up the balance of payments. One offsets the other. They have to”.

Some but not all of USA’s entries into its capital account is due to our balance of global trade. I don’t know to what are their relative proportions.

USA’s GDP has a much greater, and international transfers of wealth have a much lesser affect upon our creation of jobs, unemployment rate and median wage.
USA’s global balance of trade, not the capital account is an integral factor of GDP.

Back within reply #25 LikeaBird03 (almost as if he anticipated your statement), correctly wrote:
[“Nonsense, the capital surplus is foreign entities buying US securities to balance out the trade deficits, most of that buying is of TBills. So we have twin deficits that are offsetting each other, the end result of this is debt, and more debt”].

Trade deficits are ALWAYS detrimental to their nations’ GDPs.

Respectfully, Supposn

 

[Supposn]

Toro, the term “investment” is often casually used even by economists. When economists are being precise, they differentiate between the terms “investment” and “transfers of wealth”.
“Investment” is the consumption or use of effort or goods or service products in anticipation of some economic benefit. Except in the cases of purchasing enterprises’ initial or reserve offering of stocks or bonds, such purchases are “transfers of wealth” rather than “investments”.
Investments are and Transfers of wealth are not factors within GDP calculation formulas.

U.S. global trade deficit of dollars did not purchase U.S. goods or service products. They were used within transfers of wealth transactions. Trade deficits’ detriment to the GDP is baked into the GDP formula. The capital account is not a factor within the GDP.

Trade deficits are ALWAYS detrimental to their nation’s GDPs.

Respectfully, Supposn

 

[Quantum Windbag]

Re: 'Shop Small' November 26Th - a good idea but why not extend it a bit. https://www.facebook.com/SmallBusinessSaturday?extlink=ps-gabmd-2011SBS and Shop Small

I've always felt Americans could solve the jobs problem if they had the will and realized you sometimes need to pay more for a product made by someone who has a decent life. Most people would like a decent life. Instead, you hear whining about taxes and regulation and both have been higher and more stringent in the past. So why do we not ask ourselves why?

So what have you done for America? Lots of whining but do you buy made in the USA? Do you drive a made in the America automobile? Do you support small and large businesses who build here? Do you support a fair wage? Scapegoating is heard too often, it is their fault: government, unions, immigrants, take your pick, history is full of examples, but what do you do for America? Do you support legislation that supports the America worker? The only thing I have seen worked since the 2008 election is talk, running your mouth is easy. Talk is cheap, but what do you do for America and its people? Ideas have power, but ideas should be about people. Time to put up or shut-up, Taxes have been reduced since John F. Kennedy and the economy has oddly performed the miracle many preach. Now is the time to fulfill your pledge given to the America people and to do something meaningful and stop pointing fingers. What have you done for America?

Every day of the year buy American. Google 'made in America.'

A few links:

MadeInUSA - Home- Recycling American Dollars Through Patriotic Spending
How Americans Can Buy American
American Made Products Directory - Made in USA, United States Manufacturers
THE AMERICAN LIST | A Continuous Lean.
Shirts Made in USA : All American Clothing
American and Unionmade Clothing by All USA Clothing


Buy American = "Because Ford, GM and Chrysler conduct far more of their research, design, engineering, manufacturing and assembly work in the U.S. than foreign automakers do, buying a Ford, GM, or Chrysler supports almost three times as many jobs as buying the average foreign automobile. Some comparisons are even more striking. Buying a Ford supports 3.5 times more jobs than buying a Hyundai. Comparing a Honda and a Hyundai? Buying a Honda supports more than 2 times more jobs." The Level Field Institute


Bumper stickers I'd like to see.

Buy American - support all Americans, including yourself.

Our children, our grandchildren, ourselves require we support each other, buy American.

Quality! our Buick is number one.

Buy American and Thumbs up! http://www.usmessageboard.com/economy/128477-did-obama-save-gm-3.html#post2607852

Why stop there? Why shouldn't people from California buy Californian? How about LA buying only from LA? Why not insist on only doing business with people in your neighborhood, and insisting that they do the same? Could it be because it doesn't actually work in the real world, and that people who call for things like this are all idiots who know nothing about the economy?

 

[expat_panama]

The problem is that foreign investors are not investing in US business, they're investing in US gov't bonds....

Exactly, it's called the crowding out effect, and it's just one more way our growing govt is choking the private sector.

Maybe not--

--this last quarter foreign direct investment was more than foreign T-bill purchases.

 

[likeabird03]

The problem is that foreign investors are not investing in US business, they're investing in US gov't bonds....

Exactly, it's called the crowding out effect, and it's just one more way our growing govt is choking the private sector.

Maybe not--

--this last quarter foreign direct investment was more than foreign T-bill purchases.

I think if it weren't for the huge amount of debt being issued by the govt in the last couple years, we would have seen private investment actually grow more at a time when we most needed it. The world has been flush with liquidity in recent years and as the graph shows the govt has been a far larger beneficiary of that than the private sector has, up until the last quarter.

The recent decline in the growth of federal debt being held by foreign entities to below the level of private debt is likely due to the fact that China and other nations have slowed their purchases of T-Bills by quite a bit in the last year, and the federal reserve has been the buyer of the debt instead through QE.

 

[Supposn]

Quantum Windbag, the cause of Midcan5’s complaints is our trade deficit. I believe it’s unrealistic to expect that individuals will act contrary to their own immediate interests. (Refer to reply #12).

USA’s laws and regulations do nothing to prevent or limit our trade deficit. For this I blame U.S. voters’ and the legislatures we choose.

I describe the cause and a remedy for significantly reducing USA’s trade deficit within the topics:

Refer to the topics:

“Warren Buffett's concept to significantly reduce USA's trade deficit”,
first posted @ 8:10 PM, August 30, 2009 and last posted @ 1:28 PM, June 15, 2011

“Trade deficits are ALWAYS detrimental to their nations’ GDPs”
FIRST POSTED @ 10:25AM, November 30, 2011 and last posted @ 4:34 am, December 6, 2011

and to World Wide Web site “USA-Trade-Deficit.Blogspot.Com “.

Respectfully, Supposn

 

[Quantum Windbag]

Quantum Windbag, the cause of Midcan5’s complaints is our trade deficit. I believe it’s unrealistic to expect that individuals will act contrary to their own immediate interests. (Refer to reply #12).

USA’s laws and regulations do nothing to prevent or limit our trade deficit. For this I blame U.S. voters’ and the legislatures we choose.

I describe the cause and a remedy for significantly reducing USA’s trade deficit within the topics:

Refer to the topics:

“Warren Buffett's concept to significantly reduce USA's trade deficit”,
first posted @ 8:10 PM, August 30, 2009 and last posted @ 1:28 PM, June 15, 2011

“Trade deficits are ALWAYS detrimental to their nations’ GDPs”
FIRST POSTED @ 10:25AM, November 30, 2011 and last posted @ 4:34 am, December 6, 2011

and to World Wide Web site “USA-Trade-Deficit.Blogspot.Com “.

Respectfully, Supposn

Go read your thread, you will see my response.

Resepctfully,
QW

 

[expat_panama]

...if it weren't for the huge amount of debt being issued by the govt in the last couple years, we would have seen private investment actually grow more at a time when we most needed it...

Maybe or maybe not; we can't know a 'what-if'. What we do know is that if the government hadn't borrowed the money it would have taxed an equal amount and that that definitely would have hurt private investment "at a time when we most needed it". The problem's not on the revenue side, it's on the spending side.

 

[likeabird03]

...if it weren't for the huge amount of debt being issued by the govt in the last couple years, we would have seen private investment actually grow more at a time when we most needed it...

Maybe or maybe not; we can't know a 'what-if'. What we do know is that if the government hadn't borrowed the money it would have taxed an equal amount and that that definitely would have hurt private investment "at a time when we most needed it". The problem's not on the revenue side, it's on the spending side.

Well we wouldn't have had to borrow as much if it weren't for Obama being so spend-crazy.