- Joined
- Nov 3, 2016
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- 1,158
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- Progressive
I’m being completely serious. “Trade deficits” don’t exist. The only way people can assert they do is by engaging in mercantilism and claiming that currency is a special magical thing rather than just being another thing of value to be traded along with goods and services.
In the mercantilist’s mind, we trade X value of goods and services to China and receive Y value back, without factoring in the movement of currency as well. The “goal”, like the mercantilists of Adam Smith’s day, is to minimize the outflow of “gold”, because gold/currency is a special beast.
In reality, we trade X value of goods, services, and currency to China and receive X value back. Trade with China is an aggregate of individual deals made by merchants. If those deals weren’t already equal (IE if the merchants involved weren’t getting what they considered an acceptable value for their trade), then the deals wouldn’t happen.
Quester, what you say is correct, but it fails to address the meaning of the term trade deficit and therefore you conclusion is not correct. A trade deficit is not the (im)balance between the goods and their value. Trade deficit is the imbalance of money going in and out of the country. And I guess, in reference to you stating that all goods and their value are in balance, that you can than also say that trade deficit is the imbalance of goods going in and out of the country. The way you are going about it you are giving new meaning to the term trade deficit and that is not correct.
Joey