Finance, Forex and Investments

Discuss economic issues the US economy faces due to its large trade deficits with China and India?

Public Comments

1. wage slavery
2. Your question is a tough one to answer. My answer is long, but it's the best I can do on short notice. Imagine a huge wheel with dollars stuck to it. Each time it turns some dollars fall off. That’s the way our economy works. This happens when we have a trade deficit. That means treasure is leaving the country faster than it is coming in. We need a trade surplus. The money that falls off can be replaced in two ways, we can get a trade surplus (good), or we can print more money (bad); printing more money causes inflation. How do we get a trade surplus? We do this by selling more goods and services than we buy. To do this we must sell technology or manufactured items. The reason we can’t sell manufactured items to other country is because they can make them cheaper than we can. Why is this? The wages in America are among the highest in the world, thus, our goods cost more. Why do we pay so much you ask? Well primarily, the big ticket items are made by union workers earning union scale and getting union benefits. Big companies can move their manufacturing operation to another country with lower labor costs and no union problems and build their products there. China for example manufactures a huge percentage of stuff we use every day. An automobile tire made in China can cost as little as 60% of the cost should the tire be manufactured here. To make matters worse, China has about 550,000,000 workers or more in its work force. That’s approaching twice as many as the entire population of America. There is one good thing about it though, only about 154 million are under thirty years old. One other thing in our favor is that countries like China eat a lot of food; more than they can produce, so we can sell food to them. China has not yet reached its pinnacle. It may take a decade or so for China to get there and maybe as many to crumble, but crumble they will. The entire world’s economics are changing. China’s, India’s and ours, but we have the wherewithal to prevail. There is one thing the rest of the world, like it or not, has to consider. That thing is our military capabilities. We far surpass anybody else. The main deciding factor for our future is the leaders we elect. We need a warrior and a politician under the same hide. We want to keep the rest of the world on their toes. America has big muscles, it would not be wise to pi$$ us off. In the meantime, we could become the largest third world country. Let us hope not. Who would be the best man to lead us? DAMNIFIKNOW.