Are there any economic beneffits from global corporations ?

[EdwardBaiamonte]

This balance thing does not really apply to the US ( let's say the long-run is an very long-run) , because the USD is the reserve country.

means nothing!!! if liberals take over and ruin economy what value would dollars have in reserve since the liberals ruined the economy and the dollars cant buy anything of value . A reserve currency is 100% and perfectly connected to the goods it can buy in the USA. Econ 101

 

[EdwardBaiamonte]

, because the FED can allways print more dollars or make them appear magically through QE.

dear any govt can print currency?? Do you have any idea what on earth you are trying to say??

 

[CultureCitizen]

, because the FED can allways print more dollars or make them appear magically through QE.

dear any govt can print currency?? Do you have any idea what on earth you are trying to say??

That was idiotic beyond belief. Other countries are not free to print their reserve currency ( USD).

 

[CultureCitizen]

, just clarifying the fact that in the short-run a country can have an imbalance.
.

too stupid did anyone in the entire world ever disagree?????????? SLow??????????????

Ahem, probably the author of this quote :
"No trade imbalances are possible with capitalism. China gets US dollars from Walmart shoppers that must be respent in the US. A US dollar is worth, to anyone who holds it, only what it can buy in America."

 

[EdwardBaiamonte]

, just clarifying the fact that in the short-run a country can have an imbalance.
.

too stupid did anyone in the entire world ever disagree?????????? SLow??????????????

Ahem, probably the author of this quote :
"No trade imbalances are possible with capitalism. China gets US dollars from Walmart shoppers that must be respent in the US. A US dollar is worth, to anyone who holds it, only what it can buy in America."

too stupid the entire world agrees and has always agreed that when Apple invents the Iphone trade imbalances are created but making progress illegal is not an intelligent response, its a stupid liberal response.

 

[Andylusion]

, just clarifying the fact that in the short-run a country can have an imbalance.
.

too stupid did anyone in the entire world ever disagree?????????? SLow??????????????

Ahem, probably the author of this quote :
"No trade imbalances are possible with capitalism. China gets US dollars from Walmart shoppers that must be respent in the US. A US dollar is worth, to anyone who holds it, only what it can buy in America."

That quote is largely true.

On a purely technical level.... what exactly do you think a company out of China, does with an American dollar? Specifically, what exactly do you think they do with it?

The only three things that anyone anywhere can do with currency, is spend, save, and invest. Right? And saving, is usually for the purposes of larger investments or larger spending later.

So the company in China sells me a TV for $100. I don't have Chinese Yuan. So I pay with dollars. Now this Chinese company has $100 US dollars.

Can they spend it? No, nothing in Chinese accepts US dollars. Can they pay their employees? No. Their employees can not use US dollars, so they most certainly will not accept them as wages. Can they invest US dollars? No. Not in China. They can't buy a building, or purchase new equipment for making TVs.

So what exactly do you think they are going to do with US dollars? Sit on them? Stuff them in their pillows? Bury them in their back yards?

Well they can buy oil on the international market, or they can exchange the US dollars at the bank.

Um.... same problem. Different company, but same exact issue. What does the bank do with them? What does the oil export company do with them? Same thing. Entirely the same thing.

Neither can pay their employees with US dollars, nor buy stuff, nor invest.

So... eventually.... at some point, every US dollars must by necessity, return back to the country of origin, with only a very very few exceptions. For example, Panama uses the US dollar as legal currency. That makes sense, given most of the ships have sailors with US dollars in their pocket, and their biggest trading partner is the US.

Zimbabwe also used the US dollar as legal tender too.

However, most of these countries have very tiny economies, and still most of those dollars, will return to the US.

Now there still can be a trade imbalance, but not due to Capitalism.

Put simply, when the government borrows money, then there is a trade imbalance. Imagine a situation, in which the government simply didn't borrow money. Imagine if you can, what would a Chinese company, or bank, do with an American dollar, if they simply didn't have buying US Federal Bonds, as an option?

They would have no choice but to either invest the money in the US, or purchase goods from the US. Again, if they exchanged the dollar, or purchased an international product like Oil, those companies which got that dollar, would still have the same problem. They would be forced to use the dollar to purchase goods from the US, or invest in the US.

The primary reason we have a trade imbalance, is specifically because our government borrows money. By selling bonds, that action allows foreign banks and companies, to lend the money to the US government which blows it, instead of buying or investing in the US.

The solution is simply to STOP BORROWING MONEY. Which has been a mainstay of right-wing conservationism for ages.

However, if that argument isn't good enough, I have another, that I think is concrete.

Basically... it's economics. If there really was a "trade imbalanced" as defined by the people who push such an argument... where everyone else is getting all of our money, and we get poorer..... If that was true... that all this money was leaving the country, and not coming back.... why don't we see MASSIVE monetary catastrophes?

FRB How much U.S. currency is in circulation

According to the Fed, there is roughly $1.36 Trillion dollars in circulation. That's actual physical money in circulation.

United States Balance of Trade 1950-2015 Data Chart Calendar

Now according to trading economics, we have been losing $40 Billion in US dollars from trade every single MONTH, for the past 5 years.

Now think about that. We've lost $40 Billion, per month, for 5 years. 5 X 12 X $40 Billion. $2.4 Trillion dollars in hard currency.

We have supposedly lost more money from trade imbalanced, than actually exists in circulation.

You see a small problem there? Let's even say that I am 75% WRONG... That would be a loss of $600 Billion, of $1.36 Trillion in circulation. If we lost that much hard currency in international trade, then by any even remotely logical thought, we should be having currency DEFLATION of indescribable proportions. Our money should be gaining in value against nearly all currency of the world, on a WEEKLY basis.

Wendy's workers should be able to afford Corvettes by the end of the year.

Of course we don't see that, and haven't seen that in the last 20 years. Which suggests.... all that money must be coming back to the US, just as the original poster suggested.

 

[danielpalos]

I believe current metrics may not factor positive or negative multiplier effects adequately.

 

[CultureCitizen]

So what exactly do you think they are going to do with US dollars? Sit on them? Stuff them in their pillows? Bury them in their back yards?

Well they can buy oil on the international market, or they can exchange the US dollars at the bank.

The short answer
A) They can store them sure, they have 3.8 trillion of USD reserves.
B) They can give them back to the US in the way of a loan... China is the main creditor with 1.27 trillions.

Add it all , roughly 5 trillion. Sure , no problem as long as the US remains the main economy in gross terms and the US stays as the default reserve currency.

 

[CultureCitizen]

You see a small problem there? Let's even say that I am 75% WRONG... That would be a loss of $600 Billion, of $1.36 Trillion in circulation. If we lost that much hard currency in international trade, then by any even remotely logical thought, we should be having currency DEFLATION of indescribable proportions. Our money should be gaining in value against nearly all currency of the world, on a WEEKLY basis.

Wendy's workers should be able to afford Corvettes by the end of the year.

Of course we don't see that, and haven't seen that in the last 20 years. Which suggests.... all that money must be coming back to the US, just as the original poster suggested.

No, that's not right.
In a normal country such a great imbalance equals zero reserves. When that happens they have to borrow money OR devaluate their currency ( maybe both).
That doesn't happen with the US. The Fed can simply print more money or QE the banks. And that in turn creates asset bubbles.

 

[Andylusion]

So what exactly do you think they are going to do with US dollars? Sit on them? Stuff them in their pillows? Bury them in their back yards?

Well they can buy oil on the international market, or they can exchange the US dollars at the bank.

The short answer
A) They can store them sure, they have 3.8 trillion of USD reserves.
B) They can give them back to the US in the way of a loan... China is the main creditor with 1.27 trillions.

Add it all , roughly 5 trillion. Sure , no problem as long as the US remains the main economy in gross terms and the US stays as the default reserve currency.

Do me a favor. If you are going to respond to a post, please actually read the post you wish to respond to. I don't think that's unreasonable a request.

Had you actually read the post, would have read this:

Now there still can be a trade imbalance, but not due to Capitalism.

Put simply, when the government borrows money, then there is a trade imbalance. Imagine a situation, in which the government simply didn't borrow money. Imagine if you can, what would a Chinese company, or bank, do with an American dollar, if they simply didn't have buying US Federal Bonds, as an option?

They would have no choice but to either invest the money in the US, or purchase goods from the US. Again, if they exchanged the dollar, or purchased an international product like Oil, those companies which got that dollar, would still have the same problem. They would be forced to use the dollar to purchase goods from the US, or invest in the US.

The primary reason we have a trade imbalance, is specifically because our government borrows money. By selling bonds, that action allows foreign banks and companies, to lend the money to the US government which blows it, instead of buying or investing in the US.

The solution is simply to STOP BORROWING MONEY. Which has been a mainstay of right-wing conservationism for ages.

So I already answered the question of borrowing. If the Federal Government stopped borrowing money, that would force them to do other things with the cash, such as investing in the US, or purchasing goods from the US.

Thus the trade imbalance would disappear (for the most part).

This is a trade imbalanced caused by socialism (government borrowing and spending money), not capitalism.

As for the foriegn currency reserves, my understanding is that those reserves are deposits like any other. Which means, that they are similar to a wealthy man depositing his money at the bank.

The bank doesn't bury it under the floor of the bank. It loans that money out, or buys investments, or purchases goods with it, like a new bank location.

Similarly, the central bank of say China, deposits it's dollar reserves into a bank. Like the IMF or World Bank, or some international bank, like HSBC.

Regardless of where they place the foreign reserve deposits, the bank has the exact same problem all over again. What does that bank do with all that foreign currency? They can't pay their employees with it. They can't buy goods from the domestic economy with it. They can't invest it, and buy a new bank branch in China with it.

The only thing they can do, is invest it back into the country of origin. Such as, placing it on the money market for example. Which again, means the money is back in the US.

And just like I said before, if you were right, and the Chinese central back was sitting on $1.27 Trillion in US currency reserves, buried in the back yard, then by that estimate, the US should have virtually no cash left in the entire country. The Federal Reserve says that there is only $1.36 Trillion in physical US currency in circulation today. You are suggesting that $1.27 Trillion is held by China. That means that only $90 Billion physical US dollars exist in the entire country?

That's impossible, because we would have massive deflation. You realize that if you divided that $90 Billion per person, that the most any person could have in actual money would be $281 dollars. Do you see the problem? So the currency reserves are largely irrelevant.

 

[Andylusion]

You see a small problem there? Let's even say that I am 75% WRONG... That would be a loss of $600 Billion, of $1.36 Trillion in circulation. If we lost that much hard currency in international trade, then by any even remotely logical thought, we should be having currency DEFLATION of indescribable proportions. Our money should be gaining in value against nearly all currency of the world, on a WEEKLY basis.

Wendy's workers should be able to afford Corvettes by the end of the year.

Of course we don't see that, and haven't seen that in the last 20 years. Which suggests.... all that money must be coming back to the US, just as the original poster suggested.

No, that's not right.
In a normal country such a great imbalance equals zero reserves. When that happens they have to borrow money OR devaluate their currency ( maybe both).
That doesn't happen with the US. The Fed can simply print more money or QE the banks. And that in turn creates asset bubbles.

Most countries can print more of their own national currency.

The Fed has not printed enough QE money, to offset the amount of supposed currency reserves in other countries. So that explanation doesn't fit the facts.

 

[CultureCitizen]

So what exactly do you think they are going to do with US dollars? Sit on them? Stuff them in their pillows? Bury them in their back yards?

Well they can buy oil on the international market, or they can exchange the US dollars at the bank.

The short answer
A) They can store them sure, they have 3.8 trillion of USD reserves.
B) They can give them back to the US in the way of a loan... China is the main creditor with 1.27 trillions.

Add it all , roughly 5 trillion. Sure , no problem as long as the US remains the main economy in gross terms and the US stays as the default reserve currency.

Do me a favor. If you are going to respond to a post, please actually read the post you wish to respond to. I don't think that's unreasonable a request.

Had you actually read the post, would have read this:

Now there still can be a trade imbalance, but not due to Capitalism.

Put simply, when the government borrows money, then there is a trade imbalance. Imagine a situation, in which the government simply didn't borrow money. Imagine if you can, what would a Chinese company, or bank, do with an American dollar, if they simply didn't have buying US Federal Bonds, as an option?

They would have no choice but to either invest the money in the US, or purchase goods from the US. Again, if they exchanged the dollar, or purchased an international product like Oil, those companies which got that dollar, would still have the same problem. They would be forced to use the dollar to purchase goods from the US, or invest in the US.

The primary reason we have a trade imbalance, is specifically because our government borrows money. By selling bonds, that action allows foreign banks and companies, to lend the money to the US government which blows it, instead of buying or investing in the US.

The solution is simply to STOP BORROWING MONEY. Which has been a mainstay of right-wing conservationism for ages.

So I already answered the question of borrowing. If the Federal Government stopped borrowing money, that would force them to do other things with the cash, such as investing in the US, or purchasing goods from the US.

Thus the trade imbalance would disappear (for the most part).

This is a trade imbalanced caused by socialism (government borrowing and spending money), not capitalism.

As for the foriegn currency reserves, my understanding is that those reserves are deposits like any other. Which means, that they are similar to a wealthy man depositing his money at the bank.

The bank doesn't bury it under the floor of the bank. It loans that money out, or buys investments, or purchases goods with it, like a new bank location.

Similarly, the central bank of say China, deposits it's dollar reserves into a bank. Like the IMF or World Bank, or some international bank, like HSBC.

Regardless of where they place the foreign reserve deposits, the bank has the exact same problem all over again. What does that bank do with all that foreign currency? They can't pay their employees with it. They can't buy goods from the domestic economy with it. They can't invest it, and buy a new bank branch in China with it.

The only thing they can do, is invest it back into the country of origin. Such as, placing it on the money market for example. Which again, means the money is back in the US.

And just like I said before, if you were right, and the Chinese central back was sitting on $1.27 Trillion in US currency reserves, buried in the back yard, then by that estimate, the US should have virtually no cash left in the entire country. The Federal Reserve says that there is only $1.36 Trillion in physical US currency in circulation today. You are suggesting that $1.27 Trillion is held by China. That means that only $90 Billion physical US dollars exist in the entire country?

That's impossible, because we would have massive deflation. You realize that if you divided that $90 Billion per person, that the most any person could have in actual money would be $281 dollars. Do you see the problem? So the currency reserves are largely irrelevant.

In short, if no government borrowed money and no country had currency reserves then,yes no imbalances would be possible.
But that's not a real situation, that's a hypothetical situation. I am talking about the real actual economy.
So no , what you and Ed point out does not match reality, it is just a nice hypothetical exercise.

 

[danielpalos]

I believe we need more public sector means of production more than we need more global corporations.

 

[EdwardBaiamonte]

. no problem as long as the US remains the main economy in gross terms and the US stays as the default reserve currency.

and what happens if the economy shrinks and dollar is no longer used as reserve currency???????

 

[CultureCitizen]

. no problem as long as the US remains the main economy in gross terms and the US stays as the default reserve currency.

and what happens if the economy shrinks and dollar is no longer used as reserve currency???????

Bad things : Interests will go up, and the US will have to have to limit its exports, probably devaluating the USD , which in turn will create inflation . The government will have to put in place budget cuts or declare moratory, the later would be rather bad, because it will mean even higher interest rates.
And there will be a spill over effect for the main trading partners of the US : China , Canada , Mexico.

Luckily this will not be happening any time soon.

 

[EdwardBaiamonte]

In short, if no government borrowed money and no country had currency reserves then,yes no imbalances would be possible.

1) no significant imbalances are possible. That's why our trade imbalance is less than 2% of economy.

2) currency reserves are meaningless regarding trade: "Bove uses several metrics to make his point, focusing on the dollar as a percentage of total world money supply.That total has plunged from nearly 90 percent in 1952 to closer to 15 percent now. He also notes that the Chinese yuan, the yen and the euro each have a greater share of that total."

Cultureclod wants to make Toyota and free trade illegal because he lacks the IQ to understand that we are richer buying bananas from central America than growing our own.

 

[danielpalos]

To some on the left, free trade means improving the Standard of living of our trading partners until they can "harass a Judge" for their Cause and become couch potatoes over there instead of having to come over here to make us look bad with a third world work ethic, just to "harass first worlders".

 

[EdwardBaiamonte]

Luckily this will not be happening any time soon.

so why bring it up you fool?????

 

[danielpalos]

Luckily this will not be happening any time soon.

so why bring it up you fool?????

why so many ad homiminems?

 

[CultureCitizen]

Luckily this will not be happening any time soon.

so why bring it up you fool?????

Well Ed, that it won't happen soon doesn't mean the US isn't heading that way : The BRICS have created a development bank which is an alternative to the IMF and China is both selling its debt with the USA (at a rate of 1% per month) and converting its dollar reserves into gold. So that scenario could become a reality by 2030. No, not soon but not too far away either.