Wednesday, March 19, 2014

On the U.S. trade deficit

I'm making this argument here for the last time.  THERE IS NO TRADE DEFICIT. 

As long as a trade isn't the result of theft, deception, fraud or government mandate (pardon all the redundancies), all trade is balanced.  There are no surpluses; there are no deficits. 

I give Starbucks $2.12 and they give me a double-espresso. 

They buy no freight or warehousing services from me. 

China provides me with fruitstand components.  I provide China with pieces of paper that have Benjamin Franklin's picture on them.  It's balanced. 

And there's only one place where you can swap Benjamins for other goods and services. 

That would be in the USA, or with someone who will eventually spend them in the USA. 

It's always balanced. 

Those who claim otherwise have ulterior motives. 

Thanks for listening. 

2 comments:

MingoV said...

You obviously don't understand the logic of the trade deficit believers. If you pay $2.12 for a cup of coffee from Starbucks, then there is a trade deficit until Starbucks pays $2.12 for a glass of juice from you. Money functions only as a short-term IOU between pairs of buyers and sellers. Adding in other buyers and sellers is far too complicated:

You to Starbucks to barista to Walmart to distributor to China to tuition at a US university to a plumbing company to an employee (you).

Stephen Smith said...

There's no way this is the last time you will make that argument.