Solar, I stated regardless of the consequences due to any other entities (including the federal government), do or fail to do, regardless of global currency exchange rates, USA' economy would be better than otherwise if it had enacted this proposed import Certificate policy.

I'm among those that contend due to the transferable IC policy the economic improvement would be significant.  But if it were less than significant, the fact that it's a net improvement justifies its enactment.

Quote from: Solar on September 23, 2013, 06:20:49 AM... That's an emotional argument, not one based in reality. ...

Solar, I believe my statements rather than yours' are generally of superior accuracy and logic. 

Respectfully, Supposn

Quote from: Supposn on September 29, 2013, 07:38:57 AM
Solar, I stated regardless of the consequences due to any other entities (including the federal government), do or fail to do, regardless of global currency exchange rates, USA' economy would be better than otherwise if it had enacted this proposed import Certificate policy.

I'm among those that contend due to the transferable IC policy the economic improvement would be significant.  But if it were less than significant, the fact that it's a net improvement justifies its enactment.

Solar, I believe my statements rather than yours' are generally of superior accuracy and logic. 

Respectfully, Supposn

Of course you do, you live in a bubble of belief in big Govt.
As evidenced by your refusal to acknowledge my points.

Here is my attempt to put some sanity and hopefully clarity into the discussion.

Solar you shouldn't buy into the progressive liberal union-backed propaganda about trade deficits (normally China is the target) being the source of reduced wages.  Please understand there is "no such thing as a free lunch when it comes to economics".  The only way to increase a nations wealth or an individuals wealth is to INCREASE THE VALUE OF WHAT IS PRODUCED PERIOD.  If you think you see a method of getting a free lunch look again, because you invariably aren't taking into account all the implications of the policy you profess.

You are BOTH wrong about IC's.  IC's are not a tax or tariff.  They go further than a tariff.  They are out-and-out trade barriers similar to only allowing 12,000 cars per year be imported like the Japanese used to do.  Only in this case there is no distinction as to the product restricted.  Total net trade (based in dollars) is restricted.

The foreign exchanges already handle trade deficits in the most efficient manner possible.  They are truly free markets in spite of the numerous attempts by foreign governments to circumvent the free lunch law historically.  They are also the largest markets in the history of mankind and amount to trade on the order of hundreds to TRILLIONS of dollars a year.  They are hundreds upon hundreds of times as large as the oil markets which really aren't as significant as many think.

Trade deficits aren't bad for the economy or a nations wealth whatsoever.

Quote from: LibDave on October 11, 2013, 10:10:54 AM
Here is my attempt to put some sanity and hopefully clarity into the discussion.

Solar you shouldn't buy into the progressive liberal union-backed propaganda about trade deficits (normally China is the target) being the source of reduced wages.  Please understand there is "no such thing as a free lunch when it comes to economics".  The only way to increase a nations wealth or an individuals wealth is to INCREASE THE VALUE OF WHAT IS PRODUCED PERIOD.  If you think you see a method of getting a free lunch look again, because you invariably aren't taking into account all the implications of the policy you profess.

You are BOTH wrong about IC's.  IC's are not a tax or tariff.  They go further than a tariff.  They are out-and-out trade barriers similar to only allowing 12,000 cars per year be imported like the Japanese used to do.  Only in this case there is no distinction as to the product restricted.  Total net trade (based in dollars) is restricted.

The foreign exchanges already handle trade deficits in the most efficient manner possible.  They are truly free markets in spite of the numerous attempts by foreign governments to circumvent the free lunch law historically.  They are also the largest markets in the history of mankind and amount to trade on the order of hundreds to TRILLIONS of dollars a year.  They are hundreds upon hundreds of times as large as the oil markets which really aren't as significant as many think.

Trade deficits aren't bad for the economy or a nations wealth whatsoever.

I don't know what you read, but you'd have to start from the beginning, I think you saw something out of context.
I am completely against any and all govt interference, ICs, taxes (same thing) tariffs, or any barrier to free trade.

My bad.  I meant supposn but typed solar.  Brain fart.  Content was correct though.

Quote from: LibDave on October 11, 2013, 06:32:30 PM
My bad.  I meant supposn but typed solar.  Brain fart.  Content was correct though.

I agree, you were spot on.

Quote from: LibDave on October 11, 2013, 10:10:54 AM
... Trade deficits aren't bad for the economy or a nations wealth whatsoever.

Lib Dave, the thread
http://conservativepoliticalforum.com/financial/trade-deficits-are-always-detrimental-to-their-nations-gdps/msg141948/#msg141948
is devoted to the contention, "Annual trade deficits are always an immediate detrimental to their nations' GDPs".  If you can support your statement, "Trade deficits aren't bad for the economy or a nations wealth whatsoever" with a logical argument, that's the thread to do it in.

{I would point out that it would have to be a logical argument.  An argument based only upon historical statistics would not be acceptable if we cannot agree upon which is cause or effect).

Within this thread I argue that ICs are the superior method of reducing a nation's trade deficit.

Respectfully, Supposn

Quote from: LibDave on October 11, 2013, 10:10:54 AM
Here is my attempt to put some sanity and hopefully clarity into the discussion.

Solar you shouldn't buy into the progressive liberal union-backed propaganda about trade deficits (normally China is the target) being the source of reduced wages.  Please understand there is "no such thing as a free lunch when it comes to economics".  The only way to increase a nations wealth or an individuals wealth is to INCREASE THE VALUE OF WHAT IS PRODUCED PERIOD.  If you think you see a method of getting a free lunch look again, because you invariably aren't taking into account all the implications of the policy you profess.

You are BOTH wrong about IC's.  IC's are not a tax or tariff.  They go further than a tariff.  They are out-and-out trade barriers similar to only allowing 12,000 cars per year be imported like the Japanese used to do.  Only in this case there is no distinction as to the product restricted.  Total net trade (based in dollars) is restricted.

The foreign exchanges already handle trade deficits in the most efficient manner possible.  They are truly free markets in spite of the numerous attempts by foreign governments to circumvent the free lunch law historically.  They are also the largest markets in the history of mankind and amount to trade on the order of hundreds to TRILLIONS of dollars a year.  They are hundreds upon hundreds of times as large as the oil markets which really aren't as significant as many think. ...

Lib Dave, for nations experiencing chronic trade deficits, their annual assessed values of production would increase more than otherwise if they adopted a transferable Import Certificate, (IC) global trade policy.  Furthermore their sum of aggregate imports plus exports would also increase more than otherwise due to an IC policy.

An IC policy is not "pure" free trade but it's certainly market rather than government driven and its pure free enterprise.
It limits the nation's global imports of goods to the assessed values of its global exports but there are no limits upon its exports.
It does "cap" the detrimental affects upon the IC nations' global trade due to any deliberate or inadvertent foreign nations' trade advantages due to their lesser purchasing powers, or exchange rates of currency or discriminatory practices contrary to our nation's trade interests.  It does so regardless of the IC's nations' government's unwillingness or inability to defend their own enterprises within or beyond their nation's borders.

Due to the method by which the nation eliminates its trade deficit of goods, it increases the IC nation's numbers of jobs and the purchasing power of the nation's medial wage more than otherwise.

Respectfully, Supposn

You propose a centralized regulatory fix for a problem which doesn't really exist making matters worse.  The purpose of the foreign exchange markets is to correctly evaluate currencies.  In this manner, trade deficits are eliminated in a market approach.  Currencies are a commodity with some notable differences.

Let's look at how it should work in a free market situation.  To simplify things, we will assume all trade with other nations is balanced with an imbalance only between the US and China.  Let's say the US has a trade imbalance with China (not a stretch).  This will result in a reduction in the value of the dollar.  Chinese goods will become more expensive in terms of dollars to US consumers.  US goods will become cheaper in terms of Yuan to Chinese consumers.  Trade will then fall back in line.  It is a negative feedback system and in as much results in stability.

A change in currency ratio should be the result of a change in the production value of the goods produced by that nation in relation to another (assuming similar changes in the money supply).  Again the only real way to improve standard of living long term is to increase per capita production.

A method of temporarily altering this negative feedback system does exist.  China can refuse to utilized the dollars they receive.  They can also buy up any extra dollars printed by the US or put onto the Forex by other nations.  By hoarding dollars they effectively circumvent (more precisely delay) the feedback system, allowing the dollar to maintain its value.  A situation will exist where the market exchange rate of the dollar is well above its real value were the Chinese NOT pegging the currency.

Quote from: LibDave on October 18, 2013, 01:37:37 PM
You propose a centralized regulatory fix for a problem which doesn't really exist making matters worse.  The purpose of the foreign exchange markets is to correctly evaluate currencies.  In this manner, trade deficits are eliminated in a market approach.  Currencies are a commodity with some notable differences.

Let's look at how it should work in a free market situation.  To simplify things, we will assume all trade with other nations is balanced with an imbalance only between the US and China.  Let's say the US has a trade imbalance with China (not a stretch).  This will result in a reduction in the value of the dollar.  Chinese goods will become more expensive in terms of dollars to US consumers.  US goods will become cheaper in terms of Yuan to Chinese consumers.  Trade will then fall back in line.  It is a negative feedback system and in as much results in stability.

A change in currency ratio should be the result of a change in the production value of the goods produced by that nation in relation to another (assuming similar changes in the money supply).  Again the only real way to improve standard of living long term is to increase per capita production.

A method of temporarily altering this negative feedback system does exist.  China can refuse to utilized the dollars they receive.  They can also buy up any extra dollars printed by the US or put onto the Forex by other nations.  By hoarding dollars they effectively circumvent (more precisely delay) the feedback system, allowing the dollar to maintain its value.  A situation will exist where the market exchange rate of the dollar is well above its real value were the Chinese NOT pegging the currency.

Well said.
He starts with a false premise. "Reduce the trade deficit; increase GDP & median" By raising taxes.
Now how bassackwards is that, you never increase productivity, or wealth by raising taxes.

Chinese manipulation of the dollar results in Chinese goods remaining very cheap to purchase with dollars.  Americans will continue to buy Chinese goods and the trade deficit will continue or even grow.  This obviously causes higher unemployment in the US and increased employment in China while the situation continues.  So yes I agree, "Annual trade deficits are always an immediate detrimental to their nations' GDPs", but only because you stipulated the word "immediate".

In the long run trade deficits are a boon to our economy.  It is a "broken window" fallacy to look only at the immediate more visible implications of a policy while failing to identify the less visible and perhaps even longer term implications.  Until you can return all variables back into congruence you can't analyze the net affect.

This is very similar to the "broken window" fallacy of Keynesian economics.  Of course it is an immediate boon to the economy to deficit spend, just as it is an immediate boon to my standard of living to go out and borrow and spend like a drunken sailor.  But to look at my new cars, fur coats, nights out on the town and say, "Gee David is so smart for borrowing that money.  Look how much better off he is!!!" is a fallacy.  You can't determine the full impact until the situation is returned to a balanced financial position with that had I chosen not to borrow.  What you find is after paying back the debt plus interest and return to a similar financial position I am WORSE off.

Liberals profess Keynesian economics like it is the holy grail and incorrectly attribute the success of Reaganomics to Keynesian policy.  It was much more than that.  The other problem with Keynesian economics is governments NEVER pay the debt back in good times.  This is equivalent to the drunken sailor continuing to commit financial Hari Kari until he can no longer pay even the interest, can't get future loans, and starves.  Keynes himself admitted in discussions with Hayek before his death he got it wrong.

Now back to the trade deficit with China.  It may seem China is getting a free lunch.  But if you think about what they are doing you will see otherwise.  They are continuing to accept dollars for much more than they are actually worth.  They are sending us an overwhelming amount of goods at ridiculously low prices and accepting almost worthless dollars as if they were made of gold.

The myopia of this policy should be obvious to anyone.  It's like you trading my tricycle for your Rolls Royce after you have artificially increased the value of my tricycle so they are equivalent.  Worse still, these dollars continue to pile up in the Chinese reserve.  They can't get rid of them.  If they do the value of the dollar will finally plummet to a realistic level and they will lose their arses as they've been stocking up those same dollars for years.  But if they can't spend them, what good are they.  Eventually they have to give up the free lunch and start spending them.  When this occurs the fallacy of their policy will be all too apparent as what they gave for them won't compare to what they get back.

During the interim it may appear the US is taking a hit.  We are taking an immediate but temporary hit to our employment rate (especially in the manufacturing sector).  You can't compete with 1.4 Billion Chinese working for 5$/10 hour day.  Imagine what is going to happen when their workers find out what 5$ is really worth.  We circumvent much of this impact with large monetary quantitative easing (borrowing by printing Treasuries/$).  They have little choice but to go snatch them up before they effect the value of their holdings.

But their is more.  Even though we tend to notice the hurricane which has ripped through our manufacturing sector, one needs to appreciate the less noticeable cost of goods.  The result of this Chinese economic Hari Kari is to provide lots of cheap stuff for our consumers to buy with all those printed $.

Why does China do this?  Because they MUST have employment now to build their economy and maintain control over their population.  China is a disaster  environmentally, economically, socially, you name it.  They have 100's of different dialects and riots on a daily basis.  Loans are given out by a central committee based on the amount of employment the creditor promises, not on the economic feasibility of what they produce.  Imagine going to the bank and saying, "Hey I want a loan to manufacture sand".  The first and only question the bank asks you is, "How many people will you employ?"  When you reply 1000 they say, "That's not good enough.  We want you to employ 3000 instead because someone else has promised to employ 2500 people."  Even though you can't make a profit employing so many and there is no market for that much sand you agree.  Later when you can't repay the loan the central committee just gives you another loan so you can pay the first one back asking you to employ even more people.  Fully over 72% of the loans to Chinese banks are non-performing loans (NPL's).

We don't need to fear China.  Sooner or later the jobs will come back 3-fold when they go to spend those dollars.  If they don't spend them EVER what good are they?  Japan did the same thing some years back by the way.  Look at the mess Japan is in.  In fact China is the only thing saving Japan.  It gives Japan a means of getting rid of their dollars which resulted from an identical myopic attempt to get a free lunch.

When Bush wanted the Chinese to forego the exercise of their veto in the UN and approve our intervention in Iraq he didn't send Colin Powell (Secretary of State), he sent the Treasury Secretary.  Why?  The Treasury Secretary stopped by Japan and got them to agree not to dump $ on the market before meeting with China.

Remember too, when I go buy something for 1/10th the price it should cost me because China is practically GIVING us stuff, I keep the other 9/10ths of the price and pay an American a decent wage to cut my hair or wait on my table with the savings.  Our standard of living hasn't dropped a commensurate amount as a result.  In the future we will reap much more in return than otherwise would have been the case.

If you take it to extremes and let's say all of Mexico came here and performed the jobs and production of every single American for 1$ in total we would be crazy not to hire them and sit home for the total cost of the change in my couch.  Our production and standard of living would be virtually unchanged though we would have one hell of a time sitting home and partying.

Quote from: LibDave on October 18, 2013, 01:37:37 PM
You propose a centralized regulatory fix for a problem which doesn't really exist making matters worse. ...

Lib Dave, the Import Certificate proposal grants government no discretion of policy; it is market rather than government driven. (Approximate assessments of goods' values at USA ports, in USA dolars are technical rather than policy determinations.  The transferable IC proposal is not pure free trade but it is certainly pure free enterprise and it's certainly not government central planning.  All decisions are made by entreprenuers but imported goods cannot exceed the assessed values of our exported goods.

The global foreign exchange markets cannot remedy USA's loss of jobs and median wage due to foreign nations' inability or unwillingness to improve their median wages' purchasing powers.  I'm opposed to USA's altruistic foreign trade policy that has more consideration for foreign nations and little consideration for USA's salary and wage earners.

Under an Import Certificate policy, deliberate or inadvertent mischievous undermining of our global trade would be of greater harm to the perpetrators and of limited harm to our economy.  In all cases a notion that would otherwise suffer trade deficits of goods would derive net benefit from their adoption of a transferable Import Certificates policy.

Respectfully, Supposn