Quote:
Originally Posted by finnbow
You posted "What we do have is increased debt when an economy imports more than it exports" as if there is a clear and demonstrable relationship between the budget deficits and trade deficit. There isn't.
|
https://www.thebalance.com/u-s-trade...rtners-3306276
An ongoing trade deficit is detrimental to the nation’s economy because it is financed with debt. The United States can buy more than it makes because it borrows from its trading partners. It's like a party where the pizza place is willing to keep sending you pizzas and putting it on your tab. This can only continue as long as the pizzeria trusts you to repay the loan. One day, the lending countries could decide to ask America to repay the debt. On that day, the party is over.
A second concern about the trade deficit is the statement it makes about the competitiveness of the U.S. economy itself. By purchasing goods overseas for a long enough period of time, U.S. companies lose the expertise and even the factories to make those products.
Note the difference between a discussion of the "budget deficit" and the national debt. We're taking here about the increasing debt of the US Gov't. Now, you could argue that no one today credibly questions the ability of the US to pay its debts. But what about 10 years from now, or 20, or 30. There's no current plan to reduce the size of the US debt, including the current occupant of the Oval Office. To the extent that reducing the trade imbalance reduces the expansion of current debt, that's a good thing. But as the article above points out, the party can't go on forever. There are current examples of exactly that scenario.