Global trade’s affects upon GDP.

[DSGE]

Of course it does. Think about it. If 1 man in China own exxon-mobile and he sells just enough gas in the US to pay for his workers then ships the rest back to China and gives it out for free. That means the US is getting less then what it is producing, as a result of our past trade deficit.

What are you talking about? That doesn't make any sense. Are you imagining that owning exxon-mobil means that there's just this stock of oil that you suddenly get to do whatever you want with?

Also, are you imagining that if an American owns exxon-mobil they'll just take oil and give it out for free to Americans? You haven't actually demonstrated how there's any difference between US ownership and foreign ownership.

The more US businesses they own, the more free stuff China is getting. Theoretically it is even possible that China could own every business in the world, and every single Chinese person could get everything they wanted for free, while we work to provide it for them.

That's idiotic. How much stuff are you getting for free from corporations owned by Americans?

First off, yes you can do whatever you want with the business if you own it. Doesn't matter if it a small painting business and you give away free paint to your neighbors or a multi-billion dollar oil company.
Second,y ou are missing the entire point. It was just an example to illustrate the point. The point is they own these businesses for a reason. They are not buying US businesses to make US$ to buy more US businesses ad infinum. They are buying them for the purpose of extracting goods from the US economy, perpetually. A chinese man making $10m off a business he owns in the US doesn't want the cash. But he might want a jet made in the US.
And yes I do get stuff free from corporations in that sense. I own stocks, every year I get checks from those companies with which I buy stuff with.
It basically comes down to this. From a wealth perspective, it is better to invest your money then to buy goods that devalue, because it makes you more money in the long run. As a whole they are investing, while we are buying the goods. They are getting wealthier, while we are not.

Well it depends. In the case that we're deciding to consume more than we produce today and we borrow internationally to fund that consumption, yeah they get wealthier. But we also get to consume now, which is what we want. It's not the place of you or I to tell people that they should be saving more or their preferences should be different. Individuals can pursue their own interests.

In the case where we're borrowing internationally or obtaining foreign direct investment to fund investment, it's making everybody richer in the long run. When a factory buys a new machine which can increase productivity, the factory is getting something out of it. It can make more stuff in the long run. But it needs to borrow money in the short run to finance that. If we couldn't borrow internationally to fund investment, we wouldn't be able to buy the things that make us more productive. But of course they're not going to lend you money for free.

So either way, it's not a bad thing.

 

[Middleoftheroad]

What are you talking about? That doesn't make any sense. Are you imagining that owning exxon-mobil means that there's just this stock of oil that you suddenly get to do whatever you want with?

Also, are you imagining that if an American owns exxon-mobil they'll just take oil and give it out for free to Americans? You haven't actually demonstrated how there's any difference between US ownership and foreign ownership.



That's idiotic. How much stuff are you getting for free from corporations owned by Americans?

First off, yes you can do whatever you want with the business if you own it. Doesn't matter if it a small painting business and you give away free paint to your neighbors or a multi-billion dollar oil company.
Second,y ou are missing the entire point. It was just an example to illustrate the point. The point is they own these businesses for a reason. They are not buying US businesses to make US$ to buy more US businesses ad infinum. They are buying them for the purpose of extracting goods from the US economy, perpetually. A chinese man making $10m off a business he owns in the US doesn't want the cash. But he might want a jet made in the US.
And yes I do get stuff free from corporations in that sense. I own stocks, every year I get checks from those companies with which I buy stuff with.
It basically comes down to this. From a wealth perspective, it is better to invest your money then to buy goods that devalue, because it makes you more money in the long run. As a whole they are investing, while we are buying the goods. They are getting wealthier, while we are not.

Well it depends. In the case that we're deciding to consume more than we produce today and we borrow internationally to fund that consumption, yeah they get wealthier. But we also get to consume now, which is what we want. It's not the place of you or I to tell people that they should be saving more or their preferences should be different. Individuals can pursue their own interests.

In the case where we're borrowing internationally or obtaining foreign direct investment to fund investment, it's making everybody richer in the long run. When a factory buys a new machine which can increase productivity, the factory is getting something out of it. It can make more stuff in the long run. But it needs to borrow money in the short run to finance that. If we couldn't borrow internationally to fund investment, we wouldn't be able to buy the things that make us more productive. But of course they're not going to lend you money for free.

So either way, it's not a bad thing.

While it is not our place to tell them or make them invest more or save more, we should be educating them on it. If people invested and saved more, we wouldn't need to borrow internationally. This country is perfectlly capable of running a close to 0 trade deficit or even a trade surplus. What is happening is we are consuming more now, at the expense of consuming less in the future, or at least less then we would have otherwise.
In short, we are selling our future, one very small piece at a time, so small, that people can't even notice it. Yet over years and years of doing this, it adds up.

 

[DSGE]

First off, yes you can do whatever you want with the business if you own it. Doesn't matter if it a small painting business and you give away free paint to your neighbors or a multi-billion dollar oil company.
Second,y ou are missing the entire point. It was just an example to illustrate the point. The point is they own these businesses for a reason. They are not buying US businesses to make US$ to buy more US businesses ad infinum. They are buying them for the purpose of extracting goods from the US economy, perpetually. A chinese man making $10m off a business he owns in the US doesn't want the cash. But he might want a jet made in the US.
And yes I do get stuff free from corporations in that sense. I own stocks, every year I get checks from those companies with which I buy stuff with.
It basically comes down to this. From a wealth perspective, it is better to invest your money then to buy goods that devalue, because it makes you more money in the long run. As a whole they are investing, while we are buying the goods. They are getting wealthier, while we are not.

Well it depends. In the case that we're deciding to consume more than we produce today and we borrow internationally to fund that consumption, yeah they get wealthier. But we also get to consume now, which is what we want. It's not the place of you or I to tell people that they should be saving more or their preferences should be different. Individuals can pursue their own interests.

In the case where we're borrowing internationally or obtaining foreign direct investment to fund investment, it's making everybody richer in the long run. When a factory buys a new machine which can increase productivity, the factory is getting something out of it. It can make more stuff in the long run. But it needs to borrow money in the short run to finance that. If we couldn't borrow internationally to fund investment, we wouldn't be able to buy the things that make us more productive. But of course they're not going to lend you money for free.

So either way, it's not a bad thing.

While it is not our place to tell them or make them invest more or save more, we should be educating them on it. If people invested and saved more, we wouldn't need to borrow internationally. This country is perfectlly capable of running a close to 0 trade deficit or even a trade surplus. What is happening is we are consuming more now, at the expense of consuming less in the future, or at least less then we would have otherwise.
In short, we are selling our future, one very small piece at a time, so small, that people can't even notice it. Yet over years and years of doing this, it adds up.

No. I don't think we should be "educating" them. It's not a bad thing. If your personal subjective preferences are that you want to consume more now at the expense of later; or if your personal subjective preferences are that you want to consume more later than now; that's entirely your business.

 

[Middleoftheroad]

Well it depends. In the case that we're deciding to consume more than we produce today and we borrow internationally to fund that consumption, yeah they get wealthier. But we also get to consume now, which is what we want. It's not the place of you or I to tell people that they should be saving more or their preferences should be different. Individuals can pursue their own interests.

In the case where we're borrowing internationally or obtaining foreign direct investment to fund investment, it's making everybody richer in the long run. When a factory buys a new machine which can increase productivity, the factory is getting something out of it. It can make more stuff in the long run. But it needs to borrow money in the short run to finance that. If we couldn't borrow internationally to fund investment, we wouldn't be able to buy the things that make us more productive. But of course they're not going to lend you money for free.

So either way, it's not a bad thing.

While it is not our place to tell them or make them invest more or save more, we should be educating them on it. If people invested and saved more, we wouldn't need to borrow internationally. This country is perfectlly capable of running a close to 0 trade deficit or even a trade surplus. What is happening is we are consuming more now, at the expense of consuming less in the future, or at least less then we would have otherwise.
In short, we are selling our future, one very small piece at a time, so small, that people can't even notice it. Yet over years and years of doing this, it adds up.

No. I don't think we should be "educating" them. It's not a bad thing. If your personal subjective preferences are that you want to consume more now at the expense of later; or if your personal subjective preferences are that you want to consume more later than now; that's entirely your business.

I'm not talking about teaching them to change how they feel. I'm talking about teaching them to know the facts, not to be ignorant of the truth. This is not some re-educational brain washing idea I'm talking about. Letting people know that long term trade deficits negatively effect the future wealth of america is perfectly ok.
Further, much of the problems can be solved without any education at all. Eliminating government debt will bring down the trade deficit (although not nearly at a dollar for dollar amount). China revaluing their currency will also bring down the trade deficit.

 

[DSGE]

While it is not our place to tell them or make them invest more or save more, we should be educating them on it. If people invested and saved more, we wouldn't need to borrow internationally. This country is perfectlly capable of running a close to 0 trade deficit or even a trade surplus. What is happening is we are consuming more now, at the expense of consuming less in the future, or at least less then we would have otherwise.
In short, we are selling our future, one very small piece at a time, so small, that people can't even notice it. Yet over years and years of doing this, it adds up.

No. I don't think we should be "educating" them. It's not a bad thing. If your personal subjective preferences are that you want to consume more now at the expense of later; or if your personal subjective preferences are that you want to consume more later than now; that's entirely your business.

Letting people know that long term trade deficits negatively effect the future wealth of america is perfectly ok.

Except they don't. If it's people choosing based off preferences to consume now rather than in the future, they already know that going in. Nothing to be done there. A trade deficit is just a consequence of people making choices based on their values.

If it's investment being funded through borrowing internationally, that'll actually increase future wealth.

 

[Supposn]

You all,
The elder Bush got it right; Supply-Side, aka Urinate-Upon-Us is Voodoo economics.

Within the Import Certificate proposal, by significantly reducing USA’s trade deficit we’d increase our GDP which bolsters our median wage.

Within the IC proposal we’re dealing with production of aggregate products so we use dollars to keep score, but the goals are JOBS.

I’m a proponent of the IC proposal because it is fully funded by U.S. purchasers of imported products, a substantial stimulus which very much includes JOBS, Purely market driven and free enterprise.

Transfers of wealth are not the same as investing within our nation.
Investing occurs when goods and service products are consumed, used or dedicated to produce additional products of greater monetary values.

The sale of initial public offering securities provides additional capital for the issuing enterprises. Stock and bond transactions provide some additional brokerage commissions and jobs. Other than those small contributions, stock and bond transactions contribute nothing else to our economy.

There’s an inverse relationship between the GDP and the trade deficit.Refer to: World

Refer to:
topic of "Warren Buffett's concept to significantly reduce USA's trade deficit"

or www.USA-Trade-Deficit-Blogspot.Com

Respectfully, Supposn

 

[uscitizen]

No it doesn't.

Of course it does. Think about it. If 1 man in China own exxon-mobile and he sells just enough gas in the US to pay for his workers then ships the rest back to China and gives it out for free. That means the US is getting less then what it is producing, as a result of our past trade deficit.

What are you talking about? That doesn't make any sense. Are you imagining that owning exxon-mobil means that there's just this stock of oil that you suddenly get to do whatever you want with?

Also, are you imagining that if an American owns exxon-mobil they'll just take oil and give it out for free to Americans? You haven't actually demonstrated how there's any difference between US ownership and foreign ownership.

The more US businesses they own, the more free stuff China is getting. Theoretically it is even possible that China could own every business in the world, and every single Chinese person could get everything they wanted for free, while we work to provide it for them.

That's idiotic. How much stuff are you getting for free from corporations owned by Americans?

Lots, they pay taxes don't they?

 

[sparky]

America Can No Longer Support Its Own Needs | Economy In Crisis

According to Representative Betty Sutton (D-OH), the United States has lost an average of 15 manufacturing facilities per day for the past 10 years. This is the exact opposite of what was supposed to happen from expanding our free trade agreements. Not only are we not increasing our exports to other countries, but facilities that could supply goods to Americans are going out of business due to competition with cheap foreign labor. With those factories out of business, Americans are forced to buy imports.

10. Real Unemployment: One Out of Five in US | Project Censored

According to Shadowstats.com, the real unemployment rate in January 2011 was 22.2%, which is more than double than what corporate media claims. It seems that the government is keeping people in the dark about the real unemployment rate to make people believe that our economy is improving, so that the government is praised for its success in lowering unemployment.

Source:

“9% Unemployment Rate is a Statistical Lie,” Greg Hunter, USAWatchdog, February 7, 2011. 9% Unemployment Rate is a Statistical Lie | Greg Hunter

~S~

 

[EdwardBaiamonte]

You all,
The elder Bush got it right; Supply-Side, aka Urinate-Upon-Us is Voodoo economics.

Within the Import Certificate proposal, by significantly reducing USA’s trade deficit we’d increase our GDP which bolsters our median wage.

Within the IC proposal we’re dealing with production of aggregate products so we use dollars to keep score, but the goals are JOBS.

I’m a proponent of the IC proposal because it is fully funded by U.S. purchasers of imported products, a substantial stimulus which very much includes JOBS, Purely market driven and free enterprise.

Transfers of wealth are not the same as investing within our nation.
Investing occurs when goods and service products are consumed, used or dedicated to produce additional products of greater monetary values.

The sale of initial public offering securities provides additional capital for the issuing enterprises. Stock and bond transactions provide some additional brokerage commissions and jobs. Other than those small contributions, stock and bond transactions contribute nothing else to our economy.

There’s an inverse relationship between the GDP and the trade deficit.Refer to: World

Refer to:
topic of "Warren Buffett's concept to significantly reduce USA's trade deficit"

or www.USA-Trade-Deficit-Blogspot.Com

Respectfully, Supposn

a tax or tariff on imports would raise prices in America and so lower our standard of living. Plus it would start a Smoot-Hawley trade war which would limit our exports, reduce employment, and lower our standard of living still further. Econ 101. sorry

 

[Supposn]

The balance of trade is only one side of the larger balance of payments that is so frequently ignored by mainstream economists.

There is a balance between the capital account and the current account, the latter being called the balance of trade. If there is a deficit in the current account (trade deficit) there will be an equally large surplus in the capital account (investment into the country). And that is the case. Foreign countries invest more money in the US than we invest in them. Unfortunately, much of that investment is in US government bonds.

For every trade deficit, there is a capital surplus. Don't forget the other side of the equation.

ShackledNation, the capital account is due predominately due to transfers of wealth. Transfers of wealth do not increase numbers of jobs, or median wage rates or median annual wage incomes.

Your other side of the equation is nonsense.

Respectfully, Supposn

 

[Supposn]

A tax or tariff on imports would raise prices in America and so lower our standard of living. Plus it would start a Smoot-Hawley trade war which would limit our exports, reduce employment, and lower our standard of living still further. Econ 101. sorry

Edward Baiamonte, within the Import Certificate proposal, by significantly reducing USA’s trade deficit we’d increase our GDP which bolsters our median wage.

We all benefit from cheap imported goods but U.S. wage earning families are dependent upon their U.S. wages every day of each year. The working poor derive the least amount of benefits due to cheap imports and due to our GDP being less than otherwise, wage earners’ annual wages are also affected. Wage earners’ proportionally suffer the greatest harm.

I’m opposed to accepting wage earners’ lesser living standards because other nations are unwilling or unable to better compensate their own laborers.

Refer to:
topic of "Warren Buffett's concept to significantly reduce USA's trade deficit"
or www.USA-Trade-Deficit-Blogspot.Com

Respectfully, Supposn

 

[DSGE]

Oh god. You keep asserting bullshit, like "by significantly reducing USA's trade deficit we'd increase our GDP which bolsters our median wage" with absolutely noooo justification. You won't address arguments grounded in simple fucking reasoning, instead regurgitating your unfounded assertions and linking to your idiotic blog. Riddle me this: if you're not going to base a discussion in any form of logic or structured argument, why the fuck should anybody bother to read your posts?

 

[Toro]

A trade deficit does not reduce GDP. This is basic economics.

 

[Supposn]

Oh god. You keep asserting bullshit, like "by significantly reducing USA's trade deficit we'd increase our GDP which bolsters our median wage" with absolutely noooo justification. You won't address arguments grounded in simple fucking reasoning, instead regurgitating your unfounded assertions and linking to your idiotic blog. Riddle me this: if you're not going to base a discussion in any form of logic or structured argument, why the fuck should anybody bother to read your posts?

DSGE, I try respond to arguments. I sometimes respond to arguments made with inappropriate and unnecessarily bad language.

You do not believe that enactment of the IC policy wouldn’t increase our GDP. If you have already made your arguments to support your view point, didn’t I respond?

Are you faulting me because I didn’t respond, or because you were dissatisfied with my responding argument?
If you have not made an argument supporting your own views, why fault me for not responding to an argument you haven’t made?

Respectfully, Supposn

 

[DSGE]

Oh god. You keep asserting bullshit, like "by significantly reducing USA's trade deficit we'd increase our GDP which bolsters our median wage" with absolutely noooo justification. You won't address arguments grounded in simple fucking reasoning, instead regurgitating your unfounded assertions and linking to your idiotic blog. Riddle me this: if you're not going to base a discussion in any form of logic or structured argument, why the fuck should anybody bother to read your posts?

DSGE, I try respond to arguments. I sometimes respond to arguments made with inappropriate and unnecessarily bad language.

You do not believe that enactment of the IC policy wouldn’t increase our GDP. If you have already made your arguments to support your view point, didn’t I respond?

Are you faulting me because I didn’t respond, or because you were dissatisfied with my responding argument?
If you have not made an argument supporting your own views, why fault me for not responding to an argument you haven’t made?

Respectfully, Supposn

My problem is with the way you respond to arguments. You've had it explained how the " - M" term in the income-expenditure identity doesn't mean imports reduce GDP, it's there to prevent counting foreign goods consumed and invested as part of GDP. You respond not with any reasoning as to why that may be wrong, instead with shit like "No, that's incorrect". You've had explained to you how money that leaves the country to buy foreign goods invariably comes back into the country and is used to buy domestic goods, counting towards GDP. You talk garbage about "transfers of wealth" not being part of GDP, seemingly ignoring the last part of the sentence. You've been told one of the most basic principles of international trade, the kind of thing you learn in any introductory economics course, that the current account deficit is balanced by an equally sized surplus of the capital and financial account (something amazingly obvious if you're capable of half a second of thought). And you just say "that's not true". I mean just once, I'd like you to actually present an argument. Some form of structured reasoning. Not just useless references to your blog and other threads you've created which do exactly the same thing.

 

[Supposn]

..............................................I mean just once, I'd like you to actually present an argument. Some form of structured reasoning. Not just useless references to your blog and other threads you've created which do exactly the same thing.

DSGE,
GDP = [(C+I+G) + (X – M)]

C= consumer spending, I= investment spending, G= government spending
Note that “I” does not include transfers of wealth.

Expenditures for stocks, bonds, financial funds or deposits into financial institutions are transfers of wealth.

Investments are the dedication of goods and services in anticipation of profiting from production of additional goods and services of increased values.

(C+I+G)=national spending
X=exports, M=imports, (X – M) = balance of trade.

Due to an IC policy “M” is likely to be reduced. The proportion of “M’s” reduction would be positively dependent upon what addition to import prices that U.S. purchasers are willing to pay; “M’s” a market driven variable.

I’ve heard speculations that enactment of the Import Certificate policy would increase import prices by more or less than a 10% rate; the market is a constantly changing variable.

Due to a 10% increase of import prices to U.S. purchasers, I expect the reduction of “M” to be perceivable but not of great significance. So much of “Ms” reduction will be replaced with purchases of other domestic goods and services. Those other products need not be a substitute or an alternative replacement for the import product that was not purchased; (i.e. having rejected to the increased priced imported electronic device, a gift shopper might choose to purchase theater tickets).

If there were suddenly less imported goods available within USA’s domestic markets, how do you believe USA’s expenditures would be affected? Much as it might benefit individuals to do so, I don’t believe Americans’ would purchase more stocks and bonds, or deposit more money in their bank accounts.

Due to that same 10% increase of import prices, exporters of U.S. goods additional IC revenues enable the reduction of U.S. exporters’ prices which in turn increases U.S. exports, (i.e. X).
I know that we disagree on this point. You expect net price wars. We wouldn't have a net price war even if the IC’s open market rate reached 20%.

Respectfully, Supposn

 

[Supposn]

...........................

You've had explained to you how money that leaves the country to buy foreign goods invariably comes back into the country and is used to buy domestic goods, counting towards GDP. You talk garbage about "transfers of wealth" not being part of GDP, seemingly ignoring the last part of the sentence. You've been told one of the most basic principles of international trade, the kind of thing you learn in any introductory economics course, that the current account deficit is balanced by an equally sized surplus of the capital and financial account (something amazingly obvious if you're capable of half a second of thought). And you just say "that's not true". .........................,,,,,,,,,,, [/QUOTE]

DSGE, regardless of current and the capital account balancing or not balancing to each other, transfers of wealth do not induce additional investments for USA enterprises or additional jobs or an increased median wage or increased annual amounts of aggregate wages.

Respectfully, Supposn

 

[DSGE]

..............................................I mean just once, I'd like you to actually present an argument. Some form of structured reasoning. Not just useless references to your blog and other threads you've created which do exactly the same thing.

DSGE,
GDP = [(C+I+G) + (X – M)]

C= consumer spending, I= investment spending, G= government spending
Note that “I” does not include transfers of wealth.

Expenditures for stocks, bonds, financial funds or deposits into financial institutions are transfers of wealth.

Investments are the dedication of goods and services in anticipation of profiting from production of additional goods and services of increased values.

(C+I+G)=national spending
X=exports, M=imports, (X – M) = balance of trade.

Due to an IC policy “M” is likely to be reduced.

Don't care about prices for now. Let's just focus on this.

So what I'm gonna do now is, instead of saying "no you're wrong", I'm going to identify the point in your reasoning where you have gone wrong and elaborate on it:

You've correctly identified GDP = (C + I + G) + (X - M), total consumption plus total investment plus total government consumption, plus the balance of trade. Your mistake is in assuming that the " - M" term means imports lower GDP. You're saying "all other things held constant, more M means less GDP". That's fallacious, because other things can't be held constant. M is also counted in C, I and G. "Total consumption" means the consumption of domestic goods and the consumption of imported goods. Same for investment and government consumption.

The "- M" component is just there so that things which have been measured as counting towards GDP, but also count the consumption/investment/etc of foreign goods, have the "foreign goods" part removed. We don't want to count foreign produced machinery that is used in our factories, or foreign produced beer that we drink, in our calculation of gross domestic product. But all that stuff is present in C, I and G. So we subtract M from everything so that we don't count foreign made stuff.

 

[DSGE]

DSGE, regardless of current and the capital account balancing or not balancing to each other, transfers of wealth do not induce additional investments for USA enterprises or additional jobs or an increased median wage or increased annual amounts of aggregate wages.

Respectfully, Supposn

Absolutely it does. Do you think people lend us money or buy equity in our firms just so that we can take that money and stick it in some mattresses? The fact of the matter is that they give us money so that they can get a return on it. Returns aren't generated by just giving your money to the magic money tree, and in 5 years the tree gives you back your money plus interest. Returns are generated through using the money for investment. That means buying goods which make a firm be able to produce more, and earn more profit.

But you're looking at the causality the wrong way around. Rather than thinking about wealth being transferred into the country and resulting in goods being bought (which is still accurate), it's easier to think of it from the borrower's point of view. If we want to consume/invest more goods than we have produced, we have to get them from overseas, running a trade deficit. But how is that deficit financed? We borrow internationally. In aggregate, we need to borrow money from abroad in order to buy goods from abroad. The transfer of wealth from them to us occurs because we want to buy more goods than we can produce.

 

[Supposn]

Some specific product prices may not reflect all goods and service that contributed or supported the production of the specific items.

Enterprises occasionally benefit from university or government research and development assistance provided at lesser or no cost to the enterprise. Local governments may provide beneficial infrastructure to induce an enterprise’s relocation. Enterprises may manipulate their cost accounting to encourage the market for their newer products. All of this is of no consequences with regard to domestic products sold within the nation’s domestic markets.

The majority of goods and services that support the production of a final product global product are produced within the same nation as the final product. To the extent that those supporting products are not included within the prices global products they support, global product prices are understated.

The benefits of production are earned by the producing nations and denied to the importing nations;
(i.e. ALWAYS trade surpluses contribute and trade deficits are detrimental to their nation’s GDP).

Furthermore due to under-statements of global trade products’ prices,
Surpluses contributions and trade deficits’ detriments to their nations’ GDPs are generally understated.

Respectfully, Supposn