Fonseca33

GDP also only refers to goods produced within a certain country. This means that if a firm is located in one country but manufactures goods in another, those goods are counted as part of the foreign country's GDP, not the firm's home country. For example, BMW is a German company but cars manufactured in the United States are counted as part of the United States GDP.


If I buy a shoe from Walmart made in China, it is subtracted from GDP. If some component of that shoe were made in the US, then that subtracts less from GDP, because there was an intermediate export of that material from the US.

A trade deficit by itself does not allow consumers to acquire goods more cheaply. All a trade deficit means is that you buy more than you produce. There can various reasons for that including an overvalued currency, gov't overspending, strong consumption relative to rest of the world, no export base, etc. There are very poor countries w/ trade deficits, and rich ones.

This transition (in terms of developing countries taking the role of manufacturing cheap goods) has been in place now for a good 30 years. Has this transition caused trade deficits? Maybe a little, but the savings ratio has much more to do with it. The formula for net exports that is used by economists is the following:

NX=Savings-Investment

So if you save more than you invest, you will have a trade surplus and vice-versa.

I need remind you that its trade deficit in relative terms is much smaller than in many other countries and is comparatively not that big. Spain's is 2x as large, for ex.

Many economists believe a weak dollar is good. It is the easiest way to bring down the trade deficit, while at the same time helping the export sector.

A strong currency is what brought down the British Empire into its 1920's Great Depression, which was due to Churchill's foolish idea of backing the sterling w/ gold. This made it extremely overvalued and killed much of its industry. In the 1980-1985 era, the very strong dollar resulted in the result of hundreds of thousands of lost manufacturing jobs

It will not continue to lose much more value, as there is evidence that it has already bottomed vs. the Euro. Against the Yen it has been up 8% in just a few months. Most projections I have seen have the dollar gaining strength vs. the Euro after this year, all the way through 2012. The reason is because the Euro is overvalued and because the ECB will have to lessen interest rates w/ the upcoming recession.

This has happened before. In 1995, the dollar was extremely weak vs. the European currencies to a point where there was market intervention. In the early 80's the opposite was true. This is a cyle that is clearly viewed from a historical perspective. Dance of the Dollar, as they call it.

I also believe that commodity prices will come down, as global demand slows.

Fonseca33

More exaggerations:



The people you talk about isn't the majority. The US has a huge middle class, which is the most well off materially. Not saying there are no problems, but you just say things w/o thinking.

Fonseca33

fatbrit

Professor Plagiarist, perhaps?

I can't be bothered to go and find where you sourced your other cut and pastes from. Is there any original work in it?

fatbrit

Your claimed employment!

Fonseca33

Oil is the main reason why it has stayed high. Take out oil and it has really plunged. A way fix it would be to consume much less. A much less painful way would be to increase exports. Imports are declining (due to consumer recession) and exports are rising to a point where the trade deficit will be less than 4% of GDP by the end of this year, which is not high. If oil drops, it will be even less.

There is no rule which says that a country needs a balance. If a country can keep their surpluses/deficits to reasonable levels, there is no problem.

Fonseca33

Nobody believes me, so I decided to use a source that people believe.

Fonseca33

I did? I always meant the duration of unemployment.

Fonseca33

Please. What I said 6 years ago doesn't change anything now.

fatbrit

Professors (and silly adolescents who pretend to be other things on the web) are most welcome to use others' material in their argument. The normal method is to cite the work you use in your argument. But you'd know that, wouldn't you -- you being a professor and all that!

fatbrit

So...we have a match...and a live one, folks! Let the games begin!

Fonseca33

I am indeed a student Professor (official in 2 years) who has posted more informative information than you have. What have you done? Say these hyperbolic statements which have more no basis?

Fonseca33

Please quote and point out specifics of where I am wrong, instead of your childish rants.

fatbrit

You've been and cut and pasted a few articles -- so what!

Your original claim was that you were an economics professor. Now you admit you're not quite there. Most of us find it incredulous that you would even be close to achieving this exalted position.

Fonseca33

Avg. Earnings in the US for a full time worker is $53,000, according to the CPS. That's 20x China, probably, when you include all the rural workers.