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Import Certificates

drz-400

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DRZ-400, annual trade deficits are ALWAYS a drag upon their nation’s production, (i.e. their GDP).
Consequentially that drags upon their numbers of jobs and their wage rates, which employees are dependent upon.
USA’s economy is highly sensitive to the purchasing powers of employees and additionally to their immediate dependents and the many commercial and other entities that are in aggregate among, if not the greatest drivers of our economy.

We all benefit from cheaper imported goods but that doesn’t compensate for trade deficits’ net detriment to our nation’s economy.

We cannot expect every person and enterprise to behave altruistically but we can draft our trade policy laws for our aggregate individuals and enterprises immediate and longer-term best interests converge with that of our entire nation’s economy.

Respectfully, Supposn

It does not take GDP down. GDP = Income = Total Expenditure. You can't buy stuff without first having the money. All your proposal would do is lower the purchasing power of our income by driving prices up.
 

JohnfrmClevelan

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It does not take GDP down. GDP = Income = Total Expenditure. You can't buy stuff without first having the money. All your proposal would do is lower the purchasing power of our income by driving prices up.

Trade deficits are a demand leakage, and they do take GDP down. If you earn $50,000 and spend $5,000 of that on imports, there is only $45,000 left (max) for domestic demand.
 

drz-400

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Trade deficits are a demand leakage, and they do take GDP down. If you earn $50,000 and spend $5,000 of that on imports, there is only $45,000 left (max) for domestic demand.

And what does the international participant do with the $5000?
 

drz-400

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If we have a trade deficit with them, then they are sitting on it.

Nope, its called a balance of payments. Current Account + Capital Account = 0. The trade defecit is matched by investment coming into the country.
 

JohnfrmClevelan

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Nope, its called a balance of payments. Current Account + Capital Account = 0. The trade defecit is matched by investment coming into the country.

That's not real investment, it's just buying U.S. bonds. It doesn't go toward GDP or American businesses. And it's a demand leakage.
 

drz-400

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That's not real investment, it's just buying U.S. bonds. It doesn't go toward GDP or American businesses. And it's a demand leakage.

Buying American bonds is in fact a real investment, however demand leakage isn't a real term.
 

I'm Supposn

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It does not take GDP down. GDP = Income = Total Expenditure. You can't buy stuff without first having the money. All your proposal would do is lower the purchasing power of our income by driving prices up.

DRZ-400, You’re not quite correct. The term “gross domestic product”, (GDP) as used by creditable economists and statisticians throughout the world is explicitly described.
Refer to https://en.wikipedia.org/wiki/Gross_Domestic_Product_(GDP)#Expenditure_approach
or to Expenditure Method Definition | Investopedia ].

We all benefit from cheaper imported goods but they do not compensate for trade deficit’s detriment to their nation’s GDP.
Drag upon GDP due to trade deficits consequentially are also drags upon their nation's numbers of jobs and their pay rates.

This is particularly detrimental to employees, their dependents and any other entities that are significantly affected by lesser employment or pay rates.
That describes USA’s entire lower income, and almost our entire middle-income earners and all others to the extent that they're dependent upon enterprises that are themselves greatly affected by reduced circumstances of employees and their dependents.

You may, (or may not) find http://www.debatepolitics.com/econo...s-upon-their-nations-gdps.html#post1065959056
of interest.

Respectfully, Supposn
 
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JohnfrmClevelan

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Buying American bonds is in fact a real investment, however demand leakage isn't a real term.

Then take us through the process by which foreign countries buying American bonds results in real investment in American business.

After that, explain how my choosing a Chinese product over an American product does not result in lower exercised demand for American goods.
 

drz-400

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Then take us through the process by which foreign countries buying American bonds results in real investment in American business.

After that, explain how my choosing a Chinese product over an American product does not result in lower exercised demand for American goods.

First question, because they are literally investing into an American bond, for whatever that bond is being used to raise money.

Second question, if you choose a chinese product over american I'm assuming you mean it is because of price so we will start with that. So if Chinese price is lower than american you buy Chinese. The only way you could supply an equivalent amount of american product in this scenario is by raising the price. What happens to demand when the price goes up... it goes down. What does this mean? We are now poorer because we can now buy less things. Income is unchanged because we are simply shifting our limited resources to build more things that someone else was willing to supply us at a lower price.
 

JohnfrmClevelan

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First question, because they are literally investing into an American bond, for whatever that bond is being used to raise money.

But if you understand bond issuance, our government does not need anybody buying its bonds. Greenspan and Bernanke have both said as much - the Fed can buy our bonds. Plus, that money goes to the government, not American industry.

This counts as "investment" in the same sense that a buildup of inventory is put into the "investment" category - it's just some accounting weirdness.

Second question, if you choose a chinese product over american I'm assuming you mean it is because of price so we will start with that. So if Chinese price is lower than american you buy Chinese. The only way you could supply an equivalent amount of american product in this scenario is by raising the price. What happens to demand when the price goes up... it goes down. What does this mean? We are now poorer because we can now buy less things. Income is unchanged because we are simply shifting our limited resources to build more things that someone else was willing to supply us at a lower price.

No, income decreases. It is true that we will not be able to buy as much stuff if we buy American (assuming it's more expensive), but everything we spend domestically becomes domestic income. Like I said before, if your income is $50,000 and you spend $5000 of that on imports, that only leaves $45,000 for domestic producers to earn. You, the spender, might get more stuff out of the deal, but our economy as a whole loses. Next year, if nobody makes up for the lost demand, our national income goes down $5000.
 

drz-400

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But if you understand bond issuance, our government does not need anybody buying its bonds. Greenspan and Bernanke have both said as much - the Fed can buy our bonds. Plus, that money goes to the government, not American industry.

This counts as "investment" in the same sense that a buildup of inventory is put into the "investment" category - it's just some accounting weirdness.



No, income decreases. It is true that we will not be able to buy as much stuff if we buy American (assuming it's more expensive), but everything we spend domestically becomes domestic income. Like I said before, if your income is $50,000 and you spend $5000 of that on imports, that only leaves $45,000 for domestic producers to earn. You, the spender, might get more stuff out of the deal, but our economy as a whole loses. Next year, if nobody makes up for the lost demand, our national income goes down $5000.

The $5000 dollars is used to buy US assets. It is not thrown into an incinerator and burned. No one would ever trade with us if that was the case. US dollars are not currency in China! They can't do anything else with it. The balance of payments always adds up to 0.

Why historically have periods of low gdp growth or recession been characterized by a shrinking current account deficit while periods of high gdp growth been characterized by a widening one? It is because a current account deficit can also be caused by the US economy being stronger relative to its trade partners. This is because a strong economy promotes capital inflows, investment, makes domestic capital more scarce, and makes the dollar stronger. All of this is a positive in the US.

The main rule of economics is scarcity. It is impossible for us alone to make as much stuff as we would if we were also trading with someone else.
 

JohnfrmClevelan

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The $5000 dollars is used to buy US assets. It is not thrown into an incinerator and burned. No one would ever trade with us if that was the case. US dollars are not currency in China! They can't do anything else with it. The balance of payments always adds up to 0.

The $5000 ends up buying U.S. bonds, but that is really only a savings vehicle for the holder. In a fiat currency economy, bond issuance really has no other use. Bonds are not operationally necessary in order to spend - if outside dollars were necessary, then the Fed would not be able to buy bonds. It is very different than it was in the gold standard days, when it was necessary to borrow back gold-backed dollars in order to deficit spend.

Why historically have periods of low gdp growth or recession been characterized by a shrinking current account deficit while periods of high gdp growth been characterized by a widening one? It is because a current account deficit can also be caused by the US economy being stronger relative to its trade partners. This is because a strong economy promotes capital inflows, investment, makes domestic capital more scarce, and makes the dollar stronger. All of this is a positive in the US.

Because in periods of low growth or recession, Americans spend less money. It's that simple. A current account deficit just means that we are running a trade deficit, and dollars are flowing out of the country. Dollars that domestic businesses can no longer earn.

There is no scarcity of capital. Banks supply all the capital that people and businesses demand by creating loans.

The main rule of economics is scarcity. It is impossible for us alone to make as much stuff as we would if we were also trading with someone else.

That only works when trade is fairly equal. In the real world, some countries have an economic strategy of being a net exporter and building up their productive capacity that way. It doesn't advance China's interests to spend their surplus of dollars and euros on American or European goods - so they sit on them. (Actually, they buy bonds with much of their savings, but that doesn't help anybody's economy.)
 

I'm Supposn

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... The main rule of economics is scarcity. It is impossible for us alone to make as much stuff as we would if we were also trading with someone else.

DRZ400, the unilateral Import Certificate policy cannot and would not prevent importing of goods but it does not gladly tolerate its nation suffer annual trade deficits of goods.

[Due to excluding values of specifically listed scarce or precious mineral materials integral to globally traded goods, it’s conceivable that the policy may not ENTIRELY eliminate USA’s annual trade deficits of goods but it’s likely to effectively do so].

Consider goods that USA now does not produce because the production and shipping costs of similar foreign goods is marginally less. If due to Import Certificates the prices of those imported goods would be greater than the costs of producing similar goods in the USA, those goods will eventually be produced in the USA.
Additionally, since Import certificate policy serves as an indirect but effective subsidy of USA exports, USA producers of those same goods may also be able to compete in the global market places.

How much of a marginal difference in proportion to the goods entire costs?
The minimum global market value of transferable import Certificates would be due to the assessment fees that exporters of USA goods elect to pay in order to acquire the valuable transferable Import Certificates. The fees are by law set, monitored and annually reviewed to defray all direct federal expenses due to this trade policy.

Beyond that minimum value, the global market rates of transferable Import Certificates are market determined. The maximum market price of Import certificates will be reached when USA purchasers balk upon paying an additional round of increases for imported goods.

Exporters of USA goods that agreed to pay the federal fees received transferable Import Certificates of “face values” equal to the assessed values of their shipments. Other than those face values, all other information regarding a certificate, (e.g. types of goods, date of assessment, destination of shipment) are similar to the serial numbers upon currencies that function only to prevent counterfeiting or other frauds. Since there’s no other differences between certificates, the expense rates for importing T-shirts, or Rolls Royces or medicines are the same per dollar values of imports. The federal government would not favor or disfavor any particular global goods.

Refer to
http://www.debatepolitics.com/econo...-tariffs-and-import-certificate-policies.html

Respectfully, Supposn
 

Ahlevah

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As I have said many-a-time, Import Certificates, permitted by GATT Article 12, states clearly that for countries suffering from specific-import challenges said certificates can be established.

GATT? GATT is defunct, and has been for more than two decades.
 

Lafayette

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GATT? GATT is defunct, and has been for more than two decades.

GATT and the World Trade Organization

Excerpt:
Whilst GATT was a set of rules agreed upon by nations, the WTO is an institutional body. The WTO expanded its scope from traded goods to include trade within the service sector and intellectual property rights. Although it was designed to serve multilateral agreements, during several rounds of GATT negotiations (particularly the Tokyo Round) plurilateral agreements created selective trading and caused fragmentation among members. WTO arrangements are generally a multilateral agreement settlement mechanism of GATT.

Israel is a member of the WTO since 1995 ...
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