This focus on the balance of trade is sooo stupid. The US spends more than it produces so it has an aggregate deficit on the trade balance. To stop this, you need to force Americans to spend less (I.e. ignite a recession), or produce more.
Tariffs against selected countries that have a strong bilateral trade surplus with the US will not affect the US’ aggregate trade balance, since it doesn’t affect consumption by/ or production of the US economy. This is common knowledge from econ 101, and shouldn’t need to be explained to a president that supposedly has a degree in business.
To stop this, you need to force Americans to spend less (I.e. ignite a recession), or produce more.
Well, you need them to import less (i.e. stop making foreign government loans) or export less (i.e. start buying foreign government loans from other countries).
Neither of them is exactly a recession, but it’s a large change that would trigger one if done badly. (AKA, the current administration will absolutely trigger one if they try - they aren’t trying by the way.)
Ehm you have that reversed (or your phrasing is terrible). Production>consumption implies export>imports implies lending to abroad exceeds borrowing from abroad. Said differently, if the current account is in surplus, the capital account is (by definition) in deficit.
To make this all a bit more intuitive: suppose instead of spending money on consumption goods, we invest in foreign assets. In that case we spend less meaning that we either import less foreign goods or have more domestic produced goods available for export. The consequence is an increase in the current account surplus.
This focus on the balance of trade is sooo stupid. The US spends more than it produces so it has an aggregate deficit on the trade balance. To stop this, you need to force Americans to spend less (I.e. ignite a recession), or produce more.
Tariffs against selected countries that have a strong bilateral trade surplus with the US will not affect the US’ aggregate trade balance, since it doesn’t affect consumption by/ or production of the US economy. This is common knowledge from econ 101, and shouldn’t need to be explained to a president that supposedly has a degree in business.
Well, you need them to import less (i.e. stop making foreign government loans) or export less (i.e. start buying foreign government loans from other countries).
Neither of them is exactly a recession, but it’s a large change that would trigger one if done badly. (AKA, the current administration will absolutely trigger one if they try - they aren’t trying by the way.)
Ehm you have that reversed (or your phrasing is terrible). Production>consumption implies export>imports implies lending to abroad exceeds borrowing from abroad. Said differently, if the current account is in surplus, the capital account is (by definition) in deficit.
To make this all a bit more intuitive: suppose instead of spending money on consumption goods, we invest in foreign assets. In that case we spend less meaning that we either import less foreign goods or have more domestic produced goods available for export. The consequence is an increase in the current account surplus.
It’s the standard phrasing.
The loan is a piece of paper (well not anymore, but it used to be) that you make and sell around.
Don’t worry, Drumpf is on the case!