What happens when the US stops foreign trade deficit?

[HAL9000]

[Endovelico]

The trick is not for the US to stop foreign trade deficit. It is for EVERY COUNTRY to do so. In order to achieve such a zero foreign trade balance some countries would have to do a bit of import substitution - which would reduce unemployment and foster growth -, and some other countries would have to stimulate demand at home. In such a world growth would be mostly a matter of increased productivity, based on higher skills and more advanced technology. There would still be richer and poorer countries, but very few serious hardship cases.

[noddy]

in this case i have my fingers crossed that

(a) the asians can keep growing their middle class without a social crisis at the same rate the west loses them, keeping the market going.
(b) the asians can avoid being overly protectionist so that trade can start being more balanced and the asians buy western goods, providing growth in the west
(c) the west can accept scaling down without social crisis and thusly have something to trade when the asian middle class is strong enough .

if only i had an extra hand, i may need more fingers.

[Simple Minded]

[Alexis]

[YMix]

If the US is a parasite, then the international economy used to be parasite-oriented.

[Alexis]

[Tinker]

The economy must change. But it needn't so much be forced to change. It will change of its own accord. The trade deficit will re-balance as the purchasing power of the nations where we have a deficit, increases.

The economy as it has been has been modeled off of soviet bloc vs the west, and everyone else. Or 1st world, 2nd world and third world. Then it moved to Developed World, Developing World, Shithole. The Developing world have enough talent and infrastructure to take advantage of opportunities to manufacture. The lower skill level it requires the lower barrier to entry a nation has, the lower down the ladder you can go to find a nation in which to build your factory. As more factories land, they bring money, money brings prosperity to some, the prosperous begin to build hospitals, roads and other civil infrastructure, much of this is built around the development of companies and jobs. When the developing world gets more of these jobs their purchasing power increases. The more factory jobs, the more supermarket jobs, the more supermarket jobs the more construction workers, the more businesses the more janitors the more workers the more bodegas, and so on and so forth. As these jobs increase so does the infrastructural support for those businesses. More lawyers for instance. As those people increase their purchasing power beyond shelter and sustenance, the more money to purchase products from other nations. Being able to buy from other nations spurs growth in those nations.

So far we have had a differential in the way people value an individual's time across geographical boundaries. The more that gap closes, the more the trade deficit will close. As long as there are vast differentials of this type there will always be trade deficits of sorts.

As long as China was reinvesting its capital into American financial instruments the trade deficit did not matter.

[Endovelico]

[AzariLoveIran]

[Alexis]

[noddy]

[AzariLoveIran]

[Endovelico]

[AzariLoveIran]

[noddy]

i was only kidding مقابل طوفان

its not just american power that "forces" the use of the dollar but i do agree that has become more so over time and especially of late.

their was also the issue of trust in that dollar maintaining its value, it wasnt americas fault noone else in the world had dollars anyone trusted
the americans have recently destroyed the percieved trust in their system and all the power in the world wont stop the change, most likely to a basket of currencies imho.

(and heres hoping google translate works;)

[Colonel Sun]

The problem with gold is that it's discovery, mining, extraction and refining, has little correlation with general economic activity.

The amount of refined gold on the planet is tiny compared to the global economy. New mines takes years to develop.

Or as some wag observed, gold is dug up out of the ground at great expense only to be buried again in some vault at great expense.

I think pegging currencies to a basket of commodities, such as the , would be more useful.

However, this would bring to an end one of the largest speculative markets, forex, so I think that baring a major global crisis, either a gold or commodity peg is very unlikely.

[AzariLoveIran]

[Alexis]

[Alexis]

[AzariLoveIran]

[Alexis]