The US has had a trade deficit since 1975, so is the US trade deficit really such a bad thing?
In: 436
The trade deficit is a *good* thing. To paraphrase Milton Friedman, exports are the cost of international trade, imports are the gains.
The people who complain about the trade deficit are making the mistake of thinking money, by itself, has value. That is not the case. Money is only as valuable as the goods and services it can buy. Imports increase the goods available to you, exports decrease those goods. This isn’t to say exports are bad, but *the purpose of exports is to help buy imports.*
No, the US sell services and imports goods. If I make a killer app worth a trillion dollars, that doesn’t count as an export. If I use my new-found wealth to buy German cars, that gives America a trade deficit.
In other words, the US gets rich via tech, finance, things that aren’t counted as exports. The money people make doing this stuff is used to buy things in countries where it’s cheaper to make it and ship it.
The US can fill trade deficit via it’s foreign policies, mainly the petrodollar. SA agreed to only accept USD for purchasing of oil, so everyone (for now) needs to buy USD which fills in the gap.
It helps when you’re the #1 military power in the world
I have a trade deficit with my grocery store. It’s not inherently bad if you get something out of it
The big us export is the currency.
As a foreign that don’t use dollar, I see as an unfair situation, where us can print a lot of money without any disvantage. I am in favor of a new global currency for trade.
The technical term for the USs situation is a Trade Deficit, but what it actually is, by design, is the US buying influence and allegiance from its trading partners.
Not really because it’s more than compensated for by direct foreign investment in the American economy.
That’s a tough question. The US dollar is a “reserve currency,” which means other countries want to save their money in US dollars, and there is a large demand for those dollars. This results in dollars leaving the country, and a trade deficit (generally considered a bad thing).
On the other hand, if the US is in debt to other countries, it can print more dollars. In this sense, being a reserve currency is good for the US.
This is called the [Triffin dilemma](https://en.wikipedia.org/wiki/Triffin_dilemma) and is sort of a “suffering from success” issue for the US. The US is constantly dealing with money leaving the country (capital outflows), however that money gives the US tremendous influence abroad and makes it very easy to pay down foreign debt.
You may also be interested in [this video](https://www.youtube.com/watch?v=y9HoPF0_a6A) on the weaponization of the US dollar, which is possible due to its reserve currency status.
I have a trade deficit with my grocery store. It’s not inherently bad if you get something out of it
The big us export is the currency.
As a foreign that don’t use dollar, I see as an unfair situation, where us can print a lot of money without any disvantage. I am in favor of a new global currency for trade.
Latest Answers