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Started By
Message
Do Trade Deficits matter?
Posted on 2/19/26 at 10:27 pm
Posted on 2/19/26 at 10:27 pm
A narrow trade deficit (small but not zero) is often viewed by many economists as the most balanced outcome — especially for a large, developed economy like the United States.
-A modest deficit means foreigners are investing in your economy, your currency remains trusted, you attract global capital. It avoids heavy reliance on foreign financing and excessive buildup of external debt.
-A small deficit allows imports where efficient, still supports a strong domestic manufacturing base, reduces risk of industrial hollowing-out.
A narrow deficit is often considered “best” because it:
-Encourages trade efficiency
-Attracts capital
-Preserves industrial capacity
-Limits debt risk
-Reduces geopolitical vulnerability
-Maintains currency stability
Trade deficits must be financed. A large or wide deficit brings higher external debt, increasing foreign ownership of domestic assets, more income flowing abroad through interest and dividends. A large deficit can turn into a long-term net liability position.
As foreign ownership of assets rises, profits, dividends, interest payments flow out of the country. That can reduce national income over time, even if GDP remains high.
-It finances consumption instead of productive investment
-It weakens key industries
-It increases dependency on geopolitical rivals
Does it matter. Well hell yeah it does.
-A modest deficit means foreigners are investing in your economy, your currency remains trusted, you attract global capital. It avoids heavy reliance on foreign financing and excessive buildup of external debt.
-A small deficit allows imports where efficient, still supports a strong domestic manufacturing base, reduces risk of industrial hollowing-out.
A narrow deficit is often considered “best” because it:
-Encourages trade efficiency
-Attracts capital
-Preserves industrial capacity
-Limits debt risk
-Reduces geopolitical vulnerability
-Maintains currency stability
Trade deficits must be financed. A large or wide deficit brings higher external debt, increasing foreign ownership of domestic assets, more income flowing abroad through interest and dividends. A large deficit can turn into a long-term net liability position.
As foreign ownership of assets rises, profits, dividends, interest payments flow out of the country. That can reduce national income over time, even if GDP remains high.
-It finances consumption instead of productive investment
-It weakens key industries
-It increases dependency on geopolitical rivals
Does it matter. Well hell yeah it does.
4
Posted on 2/19/26 at 10:59 pm to BCreed1
I had my suspicions that the OP was AI generated, and then I saw the dash. It's a dead giveaway. No one uses this in typing except AI models.
quote:
A narrow trade deficit (small but not zero) is often viewed by many economists as the most balanced outcome — especially for a large, developed economy like the United States.
Posted on 2/20/26 at 5:18 am to TerryDawg03
quote:
then I saw the dash. It's a dead giveaway. No one uses this in typing except AI models.
I’ve always used dashes that way.
shite! Maybe I’m a simulation.
Posted on 2/20/26 at 5:47 am to TerryDawg03
quote:Regardless, BCreed gets it right when he says, "Does it matter? Well hell yeah it does."
I had my suspicions that the OP was AI generated
Posted on 2/20/26 at 6:51 am to NC_Tigah
Don’t tell Democrats. They flunked earth sciences too!
Posted on 2/20/26 at 8:21 am to Penrod
I do to. Not only that, I use bullet points.
Posted on 2/20/26 at 8:22 am to NC_Tigah
quote:
gets it right when he says, "Does it matter? Well hell yeah it does."
Thank you.
Posted on 2/20/26 at 8:26 am to BCreed1
quote:
Do Trade Deficits matter?
Ask China
Posted on 2/20/26 at 8:29 am to TerryDawg03
quote:
had my suspicions that the OP was AI generated, and then I saw the dash. It's a dead giveaway. No one uses this in typing except AI models.
Pretty sure BCreed and JDoc are one and the same….there is also a BCVol
Posted on 2/20/26 at 8:31 am to TerryDawg03
I use and have used m dashes in my writing for 10 years. I’m not giving them up just because ChatGPT uses it too
Posted on 2/20/26 at 8:33 am to BCreed1
It’s less about the trade deficit itself and more about the flow of capital behind it. A trade deficit simply means the U.S. is importing more goods and services than it exports, and the difference is financed by foreign capital flowing into U.S. assets. That capital can show up as purchases of Treasury bonds, equities, real estate, or direct investment in businesses. The key question is not whether the deficit is narrow or wide, but what kind of capital is coming in and how it is being used.
If foreign investment supports productive assets such as businesses, innovation, infrastructure, or capacity expansion, it can strengthen long term growth and national income. If it primarily finances consumption or growing government debt without productivity gains, risks accumulate over time. So yes, it matters, but the composition and deployment of capital are far more important than the headline trade deficit number alone.
If foreign investment supports productive assets such as businesses, innovation, infrastructure, or capacity expansion, it can strengthen long term growth and national income. If it primarily finances consumption or growing government debt without productivity gains, risks accumulate over time. So yes, it matters, but the composition and deployment of capital are far more important than the headline trade deficit number alone.
Posted on 2/20/26 at 9:00 am to Ten Bears
Idiot.
Posted on 2/20/26 at 9:10 am to IMSA_Fan
quote:
financed by foreign capital flowing into U.S. assets.
That's mentioned in the OP.
quote:
That capital can show up as purchases of Treasury bonds, equities, real estate, or direct investment in businesses.
Yes.
quote:
The key question is not whether the deficit is narrow or wide, but what kind of capital is coming in and how it is being used.
100% disagree. It does matter for the reasons listed in the OP. Let's assume that you are right though.
We have roughly 5,000 American companies under varying degrees of Chinese ownership or control.
GE Appliances -Haier Group
Smithfield Foods -WH Group
Motorola Mobility -Lenovo
AMC Theatres -Dalian Wanda Group (Majority stake)
Waldorf Astoria -Anbang Insurance Group
Lexmark - Ninestar
Riot Games - Tencent
Those are just some brand names no longer owned by US compaines.
Why does it matter? Cultural shifts and rise in socialism that pushes us towards that.
Posted on 2/20/26 at 9:13 am to BCreed1
100%.
Also they’re big shareholders of our agriculture and food industry which should be illegal for security reasons
Also they’re big shareholders of our agriculture and food industry which should be illegal for security reasons
Posted on 2/20/26 at 9:14 am to NC_Tigah
quote:
Regardless, BCreed gets it right when he says, "Does it matter? Well hell yeah it does."
Nevertheless, there are millions and millions of people who have convinced themselves (with help) that perennial large trade deficits, like perennial large budget deficits, do not matter. They actually believe that the US can be a permanent net consumer of the world's economic output, and pay for it by borrowing, selling off assets, printing money, or all of them combined. They would sell off US sovereignty rather than face the prospect of personal sacrifice in order to repair our broken economy. The outcome of this stupidity will be natural selection on a large scale.
Posted on 2/20/26 at 10:46 am to Sweep Da Leg
quote:
100%.
Also they’re big shareholders of our agriculture and food industry which should be illegal for security reasons
Yep. Them owning businesses and more gives them a foothold into our politics and promoting anti american ideals.
Who was it that was forced to apologize to China over a comment made about Taiwan?
Posted on 2/20/26 at 10:46 am to wdhalgren
quote:
wdhalgren
POST MORE!!!
quote:
Nevertheless, there are millions and millions of people who have convinced themselves (with help) that perennial large trade deficits, like perennial large budget deficits, do not matter. They actually believe that the US can be a permanent net consumer of the world's economic output, and pay for it by borrowing, selling off assets, printing money, or all of them combined. They would sell off US sovereignty rather than face the prospect of personal sacrifice in order to repair our broken economy. The outcome of this stupidity will be natural selection on a large scale.
Exactly
Posted on 2/20/26 at 10:48 am to wdhalgren
quote:
They would sell off US sovereignty
I mean that's the point for many on the left.
Posted on 2/20/26 at 10:52 am to TerryDawg03
quote:
I had my suspicions that the OP was AI generated, and then I saw the dash. It's a dead giveaway. No one uses this in typing except AI models.
i use dashes all the time
Posted on 2/20/26 at 10:53 am to BCreed1
quote:
Do Trade Deficits matter?
That depends entirely on the product or service. Some trade deficits are a sign of wealth, others are the result of the reality that we're not the most efficient producer of every consumable good on the planet.
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