Even with a weaker dollar, sales of competitive Asian cars, clothes, computers, cell phones in the US were destined to rise, affecting the trade balance and the US manufacturing sector, no? My memory of the era was one of US fixation on Wall Street while Japan, Taiwan, PRC, etc. … 1/2
Totally. The Big Three auto makers consciously decided to make crappy products. Remember "peelers"-- cars whose paint jobs just peeled off? Detroit decided that cheaper cars would return higher quarterly profits. Same thinking that led to Boeing crashes and improperly installed doors.
Wow, Paul,
you're playing songs again, onto posts
& although this write-up starts in 1982,,,
the 2008 drop-off had me reading your work
of which I would develop a tune
and even managed work your name into it https://www.youtube.com/watch?v=9kigouInWHI
Me too! In the past, I frankly considered reading about economics or finance as non-preferred activities. I started reading Professor Krugman‘s thoughts in the Times and now I wouldn’t miss an article!
Pretty sure if trade deficits go up, Trump will just lie and say they have gone down. Way too technocratic a measure to expect the MAGA base to notice or care.
But he’s also a lame duck, so cranking up the budget deficit and inflicting inflation on the next admin is certainly in the playbook too.
Trump will do what he did in 2018. As soon as his obnoxiously stupid trade war started showing negative affects to the economy and the markets, Trump blamed J.Powell.
1)Worth pointing out the counter example of Germany. Prior to ‘03, Germany had trade deficits. Afterwards, trade surpluses. The change was that the unions agreed to lower wages in order to have more globally competitive manufacturing companies. It worked till a few years.
2) this because it was using the Euro and couldn’t devalue their currency. So, the US and Germany can be considered as the control and the treatment regarding how budget deficits affect trade deficits and their respective manufacturing industries.
I see the logic, but it’s still hard to believe Trump would accept a lower exchange rate. Such is his obsession with strength, he assumes (as Mussolini did before him) that national strength requires a strong currency. If that has adverse consequences he’ll respond with lies and blame shifting.
The scary take away from this post is; “It seems quite possible that the coming Trump tariffs will be more about corruption than about protectionism, that many companies both domestic and foreign will in effect be able to buy themselves exemptions.” although not surprising.
Trade deficits are irrelevant, if a politician isn't focused singularly on labor productivity growth they are wasting our time. Productivity determines value added per unit of labor and the higher the productivity the higher the value added and the more competitive labor is with international peers.
And we got Reagan & his policies because white people decided that if the benefits of the New Deal & other Democratic policies had to be shared with black people, they'd rather not have them at all.
Many exploited it. The only limit was their perception of how blatant they could be. Trump recognized that because of the way the majority of white people were reacting to a black president, there were no longer any limits. No one would tell him he was wrong to be racist.
One of the challenges of the next years may actually lie in finding enough buyers of govt paper to finance budget deficits. The fact that the Treasury is even now rolling a lot of debt short term, does give rise to the concern that the curve is not as robust as it could be.
Many Americans lack basic education of economics let alone deeper understanding of the topic. We also seem to have short memories when it comes to history. Thank you for sharing your knowledge.
"Trump tariffs will be more about corruption than about protectionism, that many companies both domestic and foreign will in effect be able to buy themselves exemptions."
This ^^^ And the same for the H1B visas. Farmers and builders will be able to keep their workers, for a price.
Also, I remember from my advanced micro class, many years ago, that a country can do whatever it wants with tariffs, but in the end, the tariff effects will be negated by currency effects, so the net effect of the tariff is zero.
Trump is a sociopath, he has no conscience. Trump doesn't care about mercantilism or anything else, he is only concerned with what he believes will benefit Trump. The minute Musk crosses him, Musk will be tossed under the bus, just like all the rest.
Then there's the aftermath of dem presidents cleaning up after the ultra liberal republicans & their out of control spending on tax cuts for billionaires
"Libertarianism (from French: libertaire, itself from the Latin: libertas, lit. 'freedom') is a political philosophy holding freedom & liberty as primary values"
Not sure if there's any or many genuine libertarians, republican libs boast freedom & liberty when convenient. Ask any woman who's forced to have a vaginal ultrasound how much freedom & liberty they are feeling or if they feel "government is out of our lives" as liberal repulicans claim to support.
What Prof. Krugman has identified is the triumph of ideology over reality. We see it here in economics, but it is pervasive in conservative thinking. Climate change-- not real. Election fraud-- massive and always the fault of Democrats. Abortion-- murder. Immigration-- bad. Crime-- highest ever.
Trump intends to switch our currency to crypto. He’ll be the crypto president. No deficit, no debt. Elon and Vivek will “mine” enough crypto to balance Trump’s budget.
Nonsense? Sure. But Trump doesn’t care. And no one will stop him.
3/ But the real problem is when the Fed buys Bitcoin and it goes up, it means the Dollar is going DOWN. The Fed would be debasing our own currency which could not only lead to inflation here, but if the Dollar becomes debased, other countries might sink into Bitcoin and ALL of them will go down.
Nope. Crypto isn’t real currency based upon a respected standard. The money spent to “mine” crypto and the resources wasted on the datacenters for crypto will be dumped into our collective debt. But have fun pretending to be a trendsetter.
Also we will be handing potentially trillions of dollars in Gold to the Brologarchy, which the Treasury is supposed to make a killing on. You run into the same problem with the price of Gold. /2
Buying Crypto is ridiculous for the Fed. It’s not the same as you and your buds. If the Fed announces they are buying Billions of dollars of something, the price will skyrocket before, then go down after they buy it. There’s no way for the Fed to practically make money on it. >>
Comments
I’m from Detroit and a lot of the Big Three’s problems were self inflicted. I sense the same holds true for steel, tractors/diggers, etc.
Our products got worse. Theirs gained a foothold here because they often were better, no?
you're playing songs again, onto posts
& although this write-up starts in 1982,,,
the 2008 drop-off had me reading your work
of which I would develop a tune
and even managed work your name into it
https://www.youtube.com/watch?v=9kigouInWHI
“There’s a real shortage of songs about the balance of payments.”
🙂
But he’s also a lame duck, so cranking up the budget deficit and inflicting inflation on the next admin is certainly in the playbook too.
My point: Germany did…
Trump proposes tariffs that would violate trade treaties *he negotiated* and he *took credit for*.
His first step is a trade war for which there will never be a peace treaty because Trump’s word is garbage.
Spot-on assumption.
Trump is all about the grift. I just hope that some of the companies i hold stock in are willing to appease the dragon.
The man sold pardons for crying in the park.
2024: "Less growth and more debt: ... Italy ..." https://www.eunews.it/en/2024/11/15/less-growth-and-more-debt-eu-puts-italy-in-the-spotlight-and-calls-for-reforms/
"Spain continues to be one of the growth engines of the eurozone" https://think.ing.com/articles/spain-continues-to-be-one-of-the-growth-engines-of-the-eurozone/
Over 50% in poverty, 200% annual inflation and the dude is smiling and giving the thumbs up with a lying imbecile Nazi, Musk.
September 2024: https://www.agenzianova.com/en/news/Argentina-President-Milei-Meets-Musk-in-New-York-Third-Meeting-in-Six-Months-Video/
Biff Tannen is a super genius next to Trump.
October 2024: "Hungary’s Economy Plunges Into Recession ..." https://www.bloomberg.com/news/articles/2024-10-30/hungary-s-economy-plunges-into-recession-on-industry-downturn
This ^^^ And the same for the H1B visas. Farmers and builders will be able to keep their workers, for a price.
Also, I remember from my advanced micro class, many years ago, that a country can do whatever it wants with tariffs, but in the end, the tariff effects will be negated by currency effects, so the net effect of the tariff is zero.
Nonsense? Sure. But Trump doesn’t care. And no one will stop him.
The Fed has been debasing our currency for a long long time. Why do you think you have to work a little harder every year?
Isn’t Crypto Fiat currency as well? Instead of the Good Faith and Credit of the Government you have the Good Faith of… the Protocols?