Bad News for US Trade Deficit
 

Increased $4.4B in July, set records in dealings with China and EU


http://www.newser.com/story/264227/j...e-deficit.html

Why is it bad news? A trade deficit is a sign of a strong economy and a prosperous country. It is also an indication that the country is attractive for foreign investors.

If it is such a good thing, why doesn't anyone else want to trade places with the USA on trade imbalances?

A good question.

Like, if this country is so bad Europe puts us to shame and CUBA has better health care, why is everyone sneaking in HERE and not Cuba?

When South Africa had Apartheid, they had problems with people sneaking IN, not OUT.

Because Trade Deficits are a sign of wealth...?

Thanks for making the point of those of us not concerned about Trade Deficits.

Better re-read that.
I said NOTHING about trade deficits.

The top ten countries with the largest trade deficits. Ours is the biggest because we have the largest economy. Are all these countries as bad off as the trade deficit Chicken Littles claim we are? How can the Chicken Littles in this country brag about how great the economy is but whine about what terrible shape we are in because of the trade deficit? Perhaps because of economic illiteracy about trade and the economy?


https://en.wikipedia.org/wiki/List_o...ccount_balance

I can only assume you said Tucker had a good question regarding imbalances in trade.

Its not a good question because as you pointed out people actively try to come here illegally even though they are so bad.

The trade talk is just one glaring example of this President having really no idea what he is talking about. The standard defense of his supporters is that he's talked about doing it for decades... that's fine... he's just been wrong for decades.

Whatever you think I said......have at it.

Its hard to know with you Tom... :)

Maybe I'll tweet about it later.

Allow me to ask the question in a different way...

If deficits are such a good thing, why doesn't anyone want to trade places with the USA on trade imbalances, such as China? Why aren't the Chinese starting a trade war with us so that they can get into negative trade balance territory? After all, negative is the desired outcome, right.

Negative is not the desired outcome in and of itself. It depends on the the state of an economy and its composition. You will note that the high trade-deficit countries are largely well developed and relatively wealthy.

We are becoming more and more a service economy, and because of our evolved and successful status, a consumer economy. China is still a developing economy, based much more on production and investment rather than consumption.

China is still a trade surplus country because it is building a more capital intensive economy, and needs to sell more "stuff" in order to build up its internal investment. Because the US is an advanced service and consumer society, it is able to attract more foreign investment, like Toyota and BMW.

China needs to sell more than it buys in order to build its economy. We have the luxury of consuming more than we sell to others because that consumption attracts foreign investment. China is growing in that direction, which is why companies like GM are investing in plant and equipment over there.

We can have a strong economy with a trade deficit because that deficit is off-set by an equal capital surplus. We have consumer spending dollars flowing out of the country, but investment dollars flowing in, boosting the economy and creating jobs.

Love the logic. You build wealth by having a trade surplus, based on manufacturing i.e. production. China is building wealth. Fact established wealth is built through trade surplus and manufacturing.

Where is this wealth coming from? Is it being transferred from the countries with trade deficits to the countries, like China, with trade surpluses?

According to some economic logic promoted here, the answer is resounding no. Wealth must not be a sum zero game, there is unlimited wealth. Countries build wealth without taking wealth from other countries. Absurd!

If one country is building wealth another country is losing wealth, bottom line. See the fall of the Roman empire related to loss of wealth. Unlimited wealth is an economic lie to foster the transfer of wealth from one populace to another.

The correct answer, given by Clocker, is China is building wealth and China knows it would lose wealth if it pursued a trade deficit policy. See Imperialism.