Trade balances affects upon their nations’ GDPs.

[joG]

SURVIVAL OF THE FITTEST?



We've done what we've done, but it is hardly enough:

View attachment 67202821

Moreover, if it has been a constant 13-to-15% of the population since 1965 (half a century!), let's also recognize that it is not always the same people. Entire families drop in and crawl out, depending upon their work situation. The charted line nonetheless remains constant.

As I never tire of repeating, their work-situation depends upon their skill-sets. No developed nation can be proud of the fact that 15% of its population is forever living below the minimum sustainable level of existence.

Of course - in the land of Uncle Sam that adheres to the Darwinite Dictum "Survival of the fittest" - it is a constant rule ...
___________________

Sorry, the picture is too blurred on my screen. But it looks like you are referring to the poverty line we use in the first world, which is really quite silly. That is not poverty to those on $ 2 per diem. But, a couple of billions of people out of hunger into the global middle class has strained our societies' cohesion to the point that it is becoming difficult to maintain even the present pace. We (meaning the OECD) could probably quickly help a couple of hundred million Africans out of destitution, if the EU were to do the things necessary and in Asia another couple of hundred millions, if Japan and China were obliging. But beyond that, we are going practically as fast as possible.

 

[I'm Supposn]

... think his (i.e. Supposn's) point is "trade deficit BAD!!!" without actually understanding the issue(s).

For example, foreign investment is not counted by GDP. All those Chinese and Russians buying multi-million dollar apartments in NYC, and stock in American companies? Not included. Many economists believe that the US trade deficit is offset by foreign investment.

Visbek, trade surpluses do directly increase their nation’s GDPs.

Most creditable economists agree trade deficits do drag upon importing nations’ GDPs and numbers of jobs. Consequentially that does somewhat drag upon those nations’ wage rates.
Additionally Investments from both foreign and domestic sources are explicitly included within the expenditure method of calculating GDP and they are reflected within all other creditable methods of calculating GDP.

Investors prefer to invest in nations enjoying robust and safer economies. When their confidence in USA’s short term or longer term economic expectations is less, they seek to more divest themselves of U.S. currency and “park” their remaining U.S. dollars into U.S. Treasury debt or other safer U.S. securities. You (and I) agree with the general opinion that USA trade deficits do promote a greater proportion of investments int the USA, (which are reflected in USA’s GDP), to be derived from foreign investment sources.

You conclude because a greater proportion of funds being invested into the USA due to our annual trade deficits are derived from foreign investors, USA’s aggregate total of investments are increased due to USA’s trade deficits? That’s not a logical conclusion.

Isn’t it more logical to conclude that the amount of USA’s aggregate investment increases more when our GDP is increasing? Wouldn’t the total mount of investment be greater when our GDP is being less dragged due to our trade deficit?
Foreign rather than domestic derived investments are not of superior benefit to USA’s GDP.

Respectfully, Supposn

 

[Lafayette]

Sorry, the picture is too blurred on my screen.

Yes, I've already complained about the site's tricks with graphics. But, to no avail. It's in the software that the site is using, and can do little about. I imagine.

Info-graphics are key to any debate in economics.

But it looks like you are referring to the poverty line we use in the first world, which is really quite silly.

You are questioning the Poverty Info-graphic of the Census Bureau. Have I got that right?

Wow ...

We (meaning the OECD) could probably quickly help a couple of hundred million Africans out of destitution, if the EU were to do the things necessary and in Asia another couple of hundred millions, if Japan and China were obliging. But beyond that, we are going practically as fast as possible.

First, the EU is helping its own out of destitution.

Africa has been a wreck for centuries, and no amount of money can cure it definitively. That money would not go to helping Africans, but right into bank accounts in Geneva. Corruption is pervasive.

Let's concentrate on our own poor, shall we? They are closer to home ...
_______________________

 

[Visbek]

Well, no. GDP = national income, so when GDP goes down, so does our income.

"National income" ≠ "Wages"

In fact, wages paid to employees are not directly counted in GDP; it is only the consumption generated by those wages which are counted.

You've got the causality backwards. Wages do not fall because GDP falls; rather, if wages fall too much, and this causes people to cut back on consumption, then GDP will drop.

Similarly, the balance of exports and imports doesn't provide much direct information about wages. E.g. if both exports and imports go up, and the deficit stays the same, that still likely means more people working -- because someone is producing the greater exports, and buying the imported goods.

If you want to know how wages are changing over time, you need to look at how wages are changing over time.

Plus, when GDP goes down a few quarters in a row, that's a recession, investment suffers, and the whole thing spirals down. Whatever is happening within the economy with income disparities and other stuff, GDP does tell you how much you produce, and how much you have earned.

Fun fact! Imports tend to fall during a recession, because people are consuming less.

And again, you're obscuring complexities and ignoring causal chains in the process. While we define a recession as 2 quarters of negative GDP change, GDP is an indicator, not a cause; it's highly unlikely a recession will be prolonged solely as a result of someone saying "we're in a recession."

In fact, wages and unemployment are lagging indicators -- as shown by how we had 2 quarters of recession in 2007, but it took years for employment to get back to normal, while average wages stayed flat or dropped slightly, and total wages fell. Most of the economic suffering happened during a period that, technically speaking, was a recovery from a short recession.

The trade deficit makes up the vast majority of our current account; the other stuff is negligible. Our trade deficit is offset by federal deficit spending, mostly.

Yeah, not so much. 2014 figures:

C = $10t
I = $2.7t
G = $2.8t
Ex = $2t
Im = $2.5t

Y = $16t

US trade balance in 2014: $508bn
New foreign investment in US in 2014: $110bn

Consumption is the bulk of GDP. Federal deficit spending is included in G. New foreign investment is not chump change. Foreign purchases of US government debt is not (afaik) included as an export.

Wanna try that agin? :mrgreen:

A small trade deficit isn't a big deal. Like you said above, the increased economic activity from international trade is a good thing. But a large trade deficit causes problems, as I explained above. You can buy more stuff, IF you have a job. That's the tradeoff.

Yes, like I said: it's an issue if the nation is borrowing heavily from foreigners to consume foreign goods. But in that case, the real issue is the "borrowing heavily to consume."

I also don't see $500 billion as a huge (as in, harmful or unmanageable) trade deficit in a $16 trillion economy.

To wit: What was the biggest blow the US economy took in the past 30 years? Was it an increase in imports? Was it the steady loss of job overseas? Or was it speculative bubbles in stocks, Dot Coms, real estate, and obscure financial derivatives...?

 

[Visbek]

Visbek, annual trade surpluses directly increase their nation’s GDP; annual trade deficits indirectly reduce their nation’s GDP. That’s why creditable economists do agree that trade deficits drag upon their nation’s numbers of jobs and consequentially anything that drags on job numbers must to some extent drag upon wage rates.

In other words, you didn't read a single word I wrote, and you don't understand the relationship of GDP to things like wages or employment. Nice.

And no, you can't just vaguely cite "creditable economists," because many "creditable economists" also view trade deficits as largely unproblematic for the US economy. See? Two can play the vague citation game. :mrgreen:

 

[Lafayette]

Visbek, trade surpluses do directly increase their nation’s GDPs.

Agreed.

GDP = Consumption + Investment + (Government spending) + (Exports − Imports).

GNP = GDP + NR (Net Income inflow from assets abroad or Net Income Receipts) - NP (Net Payment Outflow to foreign assets).

 

[I'm Supposn]

LIFE GOES ON ...Which is why I posted the Investopedia Article In Praise Of Trade Deficits. ...

Lafayette, if you can identify your prior post’s linking to this site, I suppose that I may find my prior response that refuted this particular link site.

Regarding the correlation between trade deficits and GDP mentioned by Investopedia:

When USA’s GDP is more robust, our domestic market’s volumes of sales are greater and to the extent that our GDP is less robust. Your correlation is that both foreign and domestic product sales volumes in USA’s domestic markets move in the same direction. (This concept alone does not take into account any differences of sales volumes due to the products being foreign or domestically produced).
Volumes of USA imports increase or decrease dependent upon sales volumes of foreign products in USA’s domestic markets.

Investepedia’s discussion of correlation between nation’s balances of trade and GDPs are inconsequential if not entirely wrong.

Respectfully, Supposn

 

[Lafayette]

To wit: What was the biggest blow the US economy took in the past 30 years? Was it an increase in imports? Was it the steady loss of job overseas? Or was it speculative bubbles in stocks, Dot Coms, real estate, and obscure financial derivatives...?

My Opinion: It was the consummate arrogance of the Replicants in the HofR who (as of 2011), in a full-fledged Great Recession, refused to spur Consumption by employing Stimulus Spending to protect jobs and expand job-creation.

BLS Employment-to-population Ratio:

Note how Obama's ARRA-spending ($787B in 2009) caused the decline in the E-to-p Ratio to flatten in 2010 at 58.5%, and no further spending (refused by the Replicants) caused the Ratio to straight-line for the next three years.

And we are still nowhere near the high of 63% in pre-2006 ...
_________________________________

 

[Visbek]

VisBek, GDP indicates how large of an economic pie is being divided.

No, it doesn't. Not at all. Again, it is:

Y = C + I + G + (Ex - Im)

It is a broad, and in many ways incomplete, measure of economic activity.

I would prefer that it would be published in terms of GDP per capita, but we don’t generally get everything we desire.

Ask and ye shall receive

https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capita

That said, GDP per capita doesn't necessarily tell us much about actual living standards. Among other things, it includes lots of things that don't directly affect citizens (e.g. military spending or corporate investment) and doesn't provide direct information about things which do (income inequality, tax rates, consumer debt etc).

Median wage is the best indicator that may or may not be available to gauge our living standards.

Yeah, not so much. Among other things, it obscures income inequality; it doesn't tell us consumer debt loads; it doesn't tell us the cost of living; it doesn't tell us household asset levels....

Median wage is also problematic because it’s too often not readily available...

BLS puts out figures pretty regularly. I don't think it is delayed more than most other indicators we use.

Statistics between different years are much less useful if they’re not all pegged to the U.S. dollar’s purchasing power.

Those stats are usually available indexed to inflation.

No one claim that the trade balance determines the nation’s number of jobs but annual trade surpluses will promote job increases and trade deficits will dampen or be a drag upon their nation’s numbers of jobs.

Sorry, wrong. Allow me to demonstrate. Figures are indexed for inflation. Let's say that:

In 2027, we have $3 trillion in exports and $3.5 trillion in imports. Deficit of $0.5 trillion.
In 2028, exports go up to $4 trillion, and imports jump to $4.7 trillion. We're producing $1 trillion more just for exports alone, which presumably means a lot more people working, thus buying more goods, thus importing more.

Trade deficit is higher, but more people are working, possibly at higher wages.

Even if we can argue that some of those imported goods could have been made in the US, it's still the case that the economy improved, and more people had jobs. Got it?

Your not inferring we should not be concerned regarding lesser jobs or lesser purchasing powers of wages?

Correct, I'm not saying that at all.

I'm saying GDP and trade balances do not indicate the quality of jobs, or wages, or unemployment levels. It barely tells us the health of an economy. All it really does is provide a broad measure of specific types of economic activity.

It's like taking your blood pressure. It's useful on its own terms, but can't tell you if you have a heart murmur, or if your arteries are hardening, or if you have cancer, or if you've broken your left leg, or....

 

[joG]

Yes, I've already complained about the site's tricks with graphics. But, to no avail. It's in the software that the site is using, and can do little about. I imagine.

Info-graphics are key to any debate in economics.



You are questioning the Poverty Info-graphic of the Census Bureau. Have I got that right?

Wow ...



First, the EU is helping its own out of destitution.

Africa has been a wreck for centuries, and no amount of money can cure it definitively. That money would not go to helping Africans, but right into bank accounts in Geneva. Corruption is pervasive.

Let's concentrate on our own poor, shall we? They are closer to home ...
_______________________

- Nope. I'm okay with what I can make out of the graphic. It's the content id est the definition that is dishonestly arbitrary.

-There is always an excuse.

 

[JohnfrmClevelan]

"National income" ≠ "Wages"

Yeah, national income = national income. But all else being equal, wages sure aren't going to go up when national income goes down.

In fact, wages paid to employees are not directly counted in GDP; it is only the consumption generated by those wages which are counted.

GDP is counted in two ways - income and expenditure.

You've got the causality backwards. Wages do not fall because GDP falls; rather, if wages fall too much, and this causes people to cut back on consumption, then GDP will drop.

That's a bit circular, don't you think?

This is why I focus on the dollars. Production = income, agreed? Spend 100% of your income domestically, and you have a steady-state economy. But there are demand leakages and demand injections; savings and trade deficits are leakages, while federal deficits, dis-saving (which seldom happens) and borrowing for investment are injections. We normally net save, and we always run a trade deficit. This is countered by federal deficit spending and normal business investment.

Similarly, the balance of exports and imports doesn't provide much direct information about wages. E.g. if both exports and imports go up, and the deficit stays the same, that still likely means more people working -- because someone is producing the greater exports, and buying the imported goods.

When you lose demand to a trade deficit, that demand must be made up for. How do we do that? By deficit spending. But a lot of this goes to simply handing money to people that are unemployed, and they are unemployed because of the loss of domestic demand. The net effect is that federal deficit spending goes to subsidize our trade deficit; the Chinese economy is producing more than they are consuming, the Chinese government ends up holding tons of foreign money, American labor is replaced with Chinese labor, and you get a cheap TV in the deal.

In a better world, Chinese workers are earning more and consuming a lot more, including more American goods, and our balance of trade is a lot closer to even. That Chinese demand for American goods would employ a lot of our unemployed labor.

If you want to know how wages are changing over time, you need to look at how wages are changing over time.

Wages are a matter of the demand for labor. Our economic pie is still very large, but the demand for American labor is weak. That's a different issue.

Fun fact! Imports tend to fall during a recession, because people are consuming less.

Yeah, I know. I said the same thing in a different thread a few days ago.

And again, you're obscuring complexities and ignoring causal chains in the process. While we define a recession as 2 quarters of negative GDP change, GDP is an indicator, not a cause; it's highly unlikely a recession will be prolonged solely as a result of someone saying "we're in a recession."

Actually, I think I'm the one that is including the complexities and the real causal chains. I know where you are coming from - that a large income disparity leads to a drop in consumption is an idea that makes a lot of sense. But consumption isn't really dropping like that. Wage stagnation is more of a slow drain, a drag on the economy - but not a sudden drop.

 

[Lafayette]

Investepedia’s discussion of correlation between nation’s balances of trade and GDPs are inconsequential if not entirely wrong

It seems that factual evidence has no influence on you.

Lotsa luck ...

 

[JohnfrmClevelan]

(cont.)

Yeah, not so much. 2014 figures:

C = $10t
I = $2.7t
G = $2.8t
Ex = $2t
Im = $2.5t

Y = $16t

US trade balance in 2014: $508bn
New foreign investment in US in 2014: $110bn

Did you remember to subtract U.S. foreign investment?

Consumption is the bulk of GDP. Federal deficit spending is included in G. New foreign investment is not chump change. Foreign purchases of US government debt is not (afaik) included as an export.

Wanna try that agin? :mrgreen:

No, I'm good.

Yes, like I said: it's an issue if the nation is borrowing heavily from foreigners to consume foreign goods. But in that case, the real issue is the "borrowing heavily to consume."

I don't think that the "borrowing" is the big issue, because I don't think that it's really "borrowing." I think the issue is the decreased demand for domestic goods, which means the decreased demand for American labor.

I also don't see $500 billion as a huge (as in, harmful or unmanageable) trade deficit in a $16 trillion economy.

That sounds like a seat-of-the-pants guess to me.

To wit: What was the biggest blow the US economy took in the past 30 years? Was it an increase in imports? Was it the steady loss of job overseas? Or was it speculative bubbles in stocks, Dot Coms, real estate, and obscure financial derivatives...?

Speculative bubbles, of course. But that's because they lead to shocks, not slow changes. That doesn't mean that the slow changes are not a big problem.

 

[JohnfrmClevelan]

It seems that factual evidence has no influence on you.

Lotsa luck ...

In his defense, Investopedia is not much of a source.

 

[Visbek]

Visbek, trade surpluses do directly increase their nation’s GDPs.

Uh, yeah... I did not deny it.

Most creditable economists agree trade deficits do drag upon importing nations’ GDPs and numbers of jobs.

Yet again, vague claims like these do not fly, in no small part because many creditable economists do NOT agree with that claim.

Consequentially that does somewhat drag upon those nations’ wage rates.

Yet again: That is not the case. GDP reflects lower wages when it happens, it does not cause drops in wages.

Additionally Investments from both foreign and domestic sources are explicitly included within the expenditure method of calculating GDP and they are reflected within all other creditable methods of calculating GDP.

Foreigners purchasing stocks, equities and government bonds are NOT included in GDP. Please check again.

You conclude because a greater proportion of funds being invested into the USA due to our annual trade deficits are derived from foreign investors, USA’s aggregate total of investments are increased due to USA’s trade deficits? That’s not a logical conclusion.

That's also not what I said.

What I'm saying is that part of the imbalance in trade is offset by foreign investments in the US that are not captured by GDP.

Isn’t it more logical to conclude that the amount of USA’s aggregate investment increases more when our GDP is increasing? Wouldn’t the total mount of investment be greater when our GDP is being less dragged due to our trade deficit?

Nope

Investment is only one component of GDP, and it is entirely plausible that the other factors could rise while investment falls.

And again, it's easy to imagine a situation where GDP increases, exports go up, more people have jobs, and the trade deficit increases.

 

[Visbek]

Agreed.

Yep, and no one's denying it.

 

[Visbek]

GDP is counted in two ways - income and expenditure.

Uh, yes, and...?

Again: The wages an employer pays is not directly counted in GDP. It's measured only when those employees spend the money in a way caught by GDP. If my boss gives me a $5000 bonus, and I convert it to cash and shove it in a safe, my wages went up while that year's GDP did not.

This is why I focus on the dollars. Production = income, agreed? Spend 100% of your income domestically, and you have a steady-state economy. But there are demand leakages and demand injections; savings and trade deficits are leakages, while federal deficits, dis-saving (which seldom happens) and borrowing for investment are injections. We normally net save, and we always run a trade deficit. This is countered by federal deficit spending and normal business investment.

Let me put it this way:

Our economy is not a zero-sum game, where every dollar that flows out from the US as payment for imported goods automatically bleeds the US dry of its productive capacity. We're an affluent nation, we're producing massive surpluses of capital, and it should not be surprising that we have a trade deficit.

Our trade deficits are also someone else's surplus. Not only does this free up US resources to make more lucrative goods, those trading partners also start buying US goods. We're basically helping to grow and expand markets around the world, and that benefits all parties. Keep in mind that US manufacturing output is at or near record highs, and a lot of that is high-end goods.

Trade surpluses also don't result in sweetness and light. Case in point: China. Years of trade surpluses, yet they are staring at massive economic difficulties. Despite a trade deficit, in many ways were are in a much stronger position than China right now.

When you lose demand to a trade deficit, that demand must be made up for. How do we do that? By deficit spending.

Erk?

Sorry, not following. I don't see how you lose demand because of a trade imbalance, or that trade deficits entail deficit spending in the normal meaning of the term (government spending in excess of revenues raised).

But a lot of this goes to simply handing money to people that are unemployed, and they are unemployed because of the loss of domestic demand. The net effect is that federal deficit spending goes to subsidize our trade deficit....

You seem to be mixing apples and oranges.

The biggest government payouts are Social Security and Medicare, and very little of that is linked to trade deficits. We don't spend much on unemployment (e.g. $45bn in 2014), and not much of that is directly attributable to imports. Heck, I'd guess at least half of the structural unemployment generated in the past 40 years is due to automation.

And of course, we don't incur federal deficits because of trade imbalances. We've had trade deficits in years where we had federal surpluses and federal deficits. We could certainly run a trade surplus and a federal deficit at the same time. The federal government isn't paying Social Security to Chinese citizens in China. There just isn't a direct connection between the two.

 

[James972]

You are looking at the Trade Equation from only one side, that if the importer. So, you are not being objective.

Trade also smaller nations (that do not have the length and breadth of America's ability to produce virtually soup-to-nuts) must do as they can. So, they trade at prices that are much lower than the US.

Which is what China did with a vengeance. And, I did not hear one complaint from Americans regarding China's Trade Surplus. Even though their product-quality leaves much to be desired.

The National Debt, I sense, is worrisome and if we would not want to throw around our weight in a pocket-war every 10/20-years, then we might not have had such a sad deficit today. A significant part of our national budget is spent by the DoD. Do we need to be policemen to the world? I say, No.

We must be strong. We must be vigilant. We must be able to protect the nation. At home.

We can spend the money saved elsewhere and more productively. Like secondary-schooling is free, so should tertiary education be the same ...

a tariff tax violently imposed on the American consumer and the trade wars that would follow cant be described as an improvement. Improvements come from new inventions and new efficiencies whose economic values are not diminished by govt interference with free trade.

 

[JohnfrmClevelan]

Uh, yes, and...?

Again: The wages an employer pays is not directly counted in GDP. It's measured only when those employees spend the money in a way caught by GDP. If my boss gives me a $5000 bonus, and I convert it to cash and shove it in a safe, my wages went up while that year's GDP did not.

No, the wages (like all other income) are counted, if using the income method. If you received your bonus in 2015, that is part of 2015's GDP calculation. But your spending (or lack of it) is measured in 2016. Again - you sold $50,000 worth of goods in 2015, so 2015's GDP is $50,000, as measured both by your output and your income. If you only spend $45,000 of that in 2016, then 2016's GDP will only be $45,000, as measured both by your output and your income. The $5000 that you set aside in savings is lost unless and until you dis-save and spend it.

Let me put it this way:

Our economy is not a zero-sum game, where every dollar that flows out from the US as payment for imported goods automatically bleeds the US dry of its productive capacity. We're an affluent nation, we're producing massive surpluses of capital, and it should not be surprising that we have a trade deficit.

No, it's not a zero-sum game, but on the other hand, dollars don't just appear out of nowhere. If you are going to do any more than guess, you need to account for the dollars that are earned, spent, saved, and borrowed. That's what I have been doing.

Our trade deficits are also someone else's surplus. Not only does this free up US resources to make more lucrative goods, those trading partners also start buying US goods. We're basically helping to grow and expand markets around the world, and that benefits all parties. Keep in mind that US manufacturing output is at or near record highs, and a lot of that is high-end goods.

If our trading partners were buying U.S. goods, then there wouldn't be a trade deficit, would there? And we are nowhere near the limits of our manufacturing output. Manufacturing has been suffering for years. And the American resource that has been "freed up" the most? Labor. We have a ton of unemployed and underemployed people, producing absolutely nothing, because there is no demand for them to meet. That is not a good thing.

Trade surpluses also don't result in sweetness and light. Case in point: China. Years of trade surpluses, yet they are staring at massive economic difficulties. Despite a trade deficit, in many ways were are in a much stronger position than China right now.

Trade surpluses are not China's problem, though. Trade surpluses are keeping Chinese labor working.

 

[JohnfrmClevelan]

(cont.)

Erk?

Sorry, not following. I don't see how you lose demand because of a trade imbalance, or that trade deficits entail deficit spending in the normal meaning of the term (government spending in excess of revenues raised).

You lose demand when some of your income is spent on Chinese goods, and the Chinese don't turn around and spend those dollars on American goods. You earned that income from American production - any of that income that you don't turn around and spend on domestic production is lost.

That lost demand can be replaced in four ways - net exports (not happening), net dis-saving (rare, and harmful to boot), businesses borrowing to invest (which they do most of the time), and federal deficit spending.

You seem to be mixing apples and oranges.

The biggest government payouts are Social Security and Medicare, and very little of that is linked to trade deficits. We don't spend much on unemployment (e.g. $45bn in 2014), and not much of that is directly attributable to imports. Heck, I'd guess at least half of the structural unemployment generated in the past 40 years is due to automation.

And of course, we don't incur federal deficits because of trade imbalances. We've had trade deficits in years where we had federal surpluses and federal deficits. We could certainly run a trade surplus and a federal deficit at the same time. The federal government isn't paying Social Security to Chinese citizens in China. There just isn't a direct connection between the two.

We don't design our federal deficit or our spending based on our expected trade deficit. That's just the way it shakes out. We deficit spend because the government likes to spend and hates to tax; despite all of the concern over the national debt, our federal deficit is a happy accident for our economy. If you look at the flow of dollars, you will find that the government deficit spends predominantly into the lower end of our economy (seniors, the unemployed, government employees, soldiers, etc.). The lower end spends their money, and it bounces around the economy until it is lost to savings - which includes China and most of our other trade partners. And that is where it builds up - that's the national debt.

 

[James972]

our federal deficit is a happy accident for our economy.

deficits leading to debt of $20 trillion is a happy accident?? $200k debt per family is happy? Did you know it has to be paid back???

 

[I'm Supposn]

Supposn wrote:
Most creditable economists agree trade deficits do drag upon importing nations’ GDPs and numbers of jobs.
/////////

... Yet again, vague claims like these do not fly, in no small part because many creditable economists do NOT agree with that claim. ...

Visbek, nation’s balance of trade are explicitly “baked into” the expenditure method of calculating their GDP. “Trade surplus” describes a positive and “trade deficit is a negative balance of trade. Regardless of the calculating method, all creditable calculations of nation’s GDPs similarly reflect their balances of trades’ affects upon their individual nation’s GDP.

Possibly you’re contending that creditable economists disagree upon the net extent of trade deficit’s detriment to GDP? What creditable economists contend that trade deficits are not detrimental to a nations GDP?

Respectfully, Supposn

Excerpted from
Expenditure Method Definition | Investopedia :

“The expenditure method is a method for calculating gross domestic product (GDP) that totals consumption, investment, government spending and net exports. Although GDP can be calculated through other methods, the expenditure method is the most common. The formula for its calculation is often expressed as GDP = C + G + I + NX

C = Consumption
G = Government Spending
I = Investment
NX = Net Exports”

 

[I'm Supposn]

Yet again: That is not the case. GDP reflects lower wages when it happens, it does not cause drops in wages.

Visbek, this is similar to the chicken and the egg quandary. Nations’ GDPs affect and are affected by their numbers of jobs. Regardless of which is the cause or the effect of any of their particular occurrences, there’s no doubt that a cause and effect relationship does exist.
Also numbers of available jobs do somewhat affect rates of unemployment and wage rates.

Foreigners purchasing stocks, equities and government bonds are NOT included in GDP. Please check again.

Transfers of wealth are not included within GDP calculations because they do not determine the nation’s production. Simply changing names on documents and transferring ownership does not directly affect production. Regarding investment as components of GDP, refer to
https://www3.nd.edu/~cwilber/econ504/504book/outln11b.html .

That's also not what I said.
What I'm saying is that part of the imbalance in trade is offset by foreign investments in the US that are not captured by GDP.

Visbec, you’re incorrect. It is all captured by GDP but sources are not parsed between domestic or foreign.

Nope
Investment is only one component of GDP, and it is entirely plausible that the other factors could rise while investment falls.
And again, it's easy to imagine a situation where GDP increases, exports go up, more people have jobs, and the trade deficit increases.

Visbek, I’m not contending balance of trade entirely determines GDP but a positive balance contributes and a negative balance indirectly reduces the nation’s GDP more than otherwise.
Once the USA purchasers have made their purchasing decisions, they cannot again purchase more unless they replace their spent wealth by additional earning or borrowing. Trade deficits “crowd out” USA purchasers’ abilities to purchase additional domestic products.

Respectfully, Supposn

 

[Lafayette]

In his defense, Investopedia is not much of a source.

Sez you and your sarcasm.

This is a debate-forum not a message-board. One should substantiate with fact one's arguments, not just spew them out.

Try harder - or maybe you'd be happier elsewhere? There are hundreds of other venues here ...

 

[I'm Supposn]

Originally Posted by Supposn:
"Investepedia’s discussion of correlation between nation’s balances of trade and GDPs are inconsequential if not entirely wrong".

It seems that factual evidence has no influence on you.

Lotsa luck ...

Lafayette, we’re not arguing over facts; our disagreement is of the interpretations and conclusions due to those facts.
Trade deficits are always a drag upon their nation’s GDPs.

They’re a drag upon a robust economy and upon an economy that’s behaving poorly.
I will not speculate as to the differences of effective demands’ elasticity between imported and foreign goods within USA’s domestic markets.
There’s NO significance to the differences of trade deficits when sales volumes of ALL goods within those markets are increasing or decreasing.

Respectfully, Supposn