See unfortunately you are looking at it slanted. Toyota opens one plant. 5 american plants that were standing are gone. Also those factories make some jobs but replacement isnt equal or greater. The income from those foreign investments goes out of the country and not in. They are building a factory in vietnam. They arent building planes there now. See the surpressing thing isnt really true. All the people do is buy more. Plus a direct argument is that well using the same principle china increases their production and the supply of goods increases thereby reducing the price. The government is infact getting away with this crazy borrowing cycle. Also what makes you think that the government would report the printing of dollars. The dropping of all of the currency onto the market would not really hurt them. They can unbenchmark their currency against ours. remember their monetary policy is to hold foreign and not let foreign hold theirs. How you ask does it matter if our industries and resources are foreign owned. Well let me try and explain this. All income does not enrich our nation's wealth. It goes to enriching others who in turn are able to reinvest and gain more and more out of us. It is an endless cycle of wealth transfer out of the country.

the two tiered labor market. goes with the two party system i suppose. :D

wyndhy,

Yess’m I agree with you. It is not it’s not just the trade deficit numbers that act as the sole standard for gauging an economy.

Here are a variety of numbers comparing the state of the U.S. economy from 1960 through 2003 to that of some of the nations with which it runs a trade deficit. From 1971, when the U.S. began to run the persistent balance of trade deficit which so alarms some people the U.S. economy has been ranked #1 every year.

In the table “Compared To The United States” I direct your attention in particular to the column of of Japan, a country with which the U.S. has run a large trade deficit for may years. Note that after coming ever closer to the U.S. standard, it achieved its closest approach in 1991 of 84% of U.S. and subsequently lost ground.

I'm afraid that the measurements fail to support the claims.

but that's all in the past, jseal.

George Santayana: Those who cannot learn from history are doomed to repeat it.

change is the law of life and those who look only to the past or present are certain to miss the future. jfk. ;)

rzande1,

Do you honestly think that the Fed could avoid reporting on the U.S. money supply? That somehow it could surreptitiously sneak in an few trillion dollars, and no one would notice?

wyndhy,

As I recall, JFK missed out on a lot of his future.

ouch! ooo that's harsh...:D

wyndhy,

While I may be quite off base in re the impact of a persistent trade deficit, there does seem to be a substantial body of generally accepted data which indicates that while it may not be irrelevant, the fact that a nation's current account balance is positive or negative need not be the basis of wailing and gnashing of teeth.

jeez, jseal, i wouldn't say i'm wailing. gnashing? even that's pushing it.

wyndhy,

Perhaps I misinterpreted your ealier posts.

http://www.pixies-place.com:81/foru...67&postcount=24

http://www.pixies-place.com:81/foru...34&postcount=30

I though them rather emphatic.

emphatic means wailing and gnashing?

What's really alarming is how out of whack our Current Account is getting on a quarterly basis (and yes, I know we had a slightly less negative uptick in 4Q06 but not enough). After rough parity in 1991, it's been delining (and generally more rapidly over the years). One chief culprit is the real savings rate, which has been negative in the US for some time. We're using foreign money to fund our shopping sprees. :yikes:

High current account deficits = currency devaluation = lower purchasing power for people who already lack savings. Which equals something close to sucking in my book. :D

osuche,

True, but only if that future comes to pass. I will agree that a change in the U.S. consumer savings rate is in order.