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BenGrahamReborn

13,177 Posts.

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18/09/19

12:22

Post #: 40465720
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Originally posted by Orson: ↑

Why does it matter if the US has trade deficits anyway? Fighting for fair trading rules I get, and support. But the simplistic focus on trade deficits as a sign of winning or losing is dumb.

As the US dollar is the global reserve currency and primary tool for global transactions, that means many other countries rely on holding dollar reserves, creating massive demand for U.S. financial assets. This means that the U.S. pays little for its foreign borrowing, allowing it to finance its high consumption at low cost, which boosts global demand. In 2017, Americans bought about US$552 billion more goods and services from abroad than foreigners purchased from the U.S. But foreigners sent about that amount back to the U.S. to help American businesses build factories, create jobs and increase growth.

For the US, having trade deficits doesn't mean they're losing. If US consumers are buying then the US is winning. If the focus on trade surpluses means the US consumer economy stalls as US consumers stop buying, then they really will start losing.

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Look at China to see what a trade surplus does to a country.
It went from dustbowl to skyscrapers in the last 30 years.
America was largely unchanged.
Anyone that says a trade deficit is not a bad thing is overcomplicating things.
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