re: Yahoo! News: ‘Thank you, Mr. Tariff!’: The US just posted a massive 55% deficit cut

Nice

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The US just posted a massive 55% deficit cut

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From a 10 second Google search:

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The US trade deficit is often considered a sign of economic strength rather than a problem because it reflects high foreign investment in the US and allows Americans to consume more goods at lower costs.

It represents a balanced capital account, where foreign currency is reinvested into US bonds, businesses, and real estate, fueling economic growth and employment.

Why the Trade Deficit is Viewed Positively:

Capital Account Balance: A trade deficit (current account) is offset by a surplus in the capital account, meaning foreign entities invest their earned dollars back into US assets like Treasury securities, stocks, and companies.

Sign of Confidence and Strength: Foreigners invest in the US because it is seen as a safe haven and a vibrant economy. This influx of capital strengthens the dollar, makes imports cheaper, and reduces inflation.

Consumer Benefits: Americans enjoy lower costs on goods (e.g., clothing, electronics) and a wider variety of products from around the world.

Job Creation: Foreign companies operate in the US, creating jobs. Nearly 8 million Americans work for US affiliates of foreign companies.

Higher Returns: The US often earns a higher return on its foreign investments than it pays out, effectively financing investment at lower costs.

Savings vs. Investment: The trade deficit is largely a reflection of the low level of US savings compared to investment demand.

Reserve Currency Status: The US dollar's role as the primary global reserve currency means foreign demand for dollars remains high, allowing the US to run persistent deficits.

While some fear that a trade deficit indicates weak manufacturing or lost jobs, economists frequently argue that it does not represent lost wealth, but rather a different, efficient allocation of capital

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So why are y'all cheering for the erosion of all of those positive things?

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From a 10 second Google search:

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Yikes, maybe force Google to do a 20 second version in the future. A bunch of that is pure nonsense.

Sometimes understanding is based on simplifying the analysis to attain root cause. An economy based on reserve fiat currency allows for multiple ways to manipulate stats and studies. Going back to the days of specie gold eliminates such allowance. Pre-1934, US money supply was strictly limited in accordance with gold reserves. Given that money supply limitation, as the US workforce expanded, workers received lower wages.

If, in that scenario, the US shed some of our gold reserves d/t trade deficits, it reduced money supply, thereby adding further downward pressure on wages. So trade deficits were of obvious and considerable concern.

The fact we're now operating in a fiat world doesn't change the nature of the problem. It just renders it a little less obvious. Now as we shed currency abroad, we just print more ... which leads to dollar devaluation and inflation.

Any assertion that massive trade deficits are harmless is pure lunacy.

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Yikes, maybe force Google to do a 20 second version in the future.

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That genuinely made me laugh. Well done.

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A bunch of that is pure nonsense.

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It's the consensus among people who study economics for a living. It's not a universal consensus, granted—you can find an economist here or there who disagrees—but it's the general consensus.

General consensuses aren't automatically correct just because they are consensuses of experts in the field, but they tend to be more correct than the opinions of laypeople.

Which is why I'm deferring to them. Do you have formal training in economics or are you just an interested layperson?

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Under ANY circumstances?

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The root cause of trade deficits are domestic. E.g., low national saving rates as evidenced by large fiscal deficits, or alternately attractive investment opportunities which draw foreign capital. The economists you are citing assume the latter, despite all evidence in our case of the former.

A trade deficit exists when national saving (private + public) is less than gross domestic investment. The deficit is financed by net capital inflows from abroad. The equation is unsustainable (i.e., massive trade deficits) if inflows primarily finance consumption, government spending, or low-return projects. This builds up debt without commensurate future income to service it.

Sustainability then hinges on whether foreigners continue to willingly finance the deficit at "reasonable" terms. As our national debt expands, there is increasing international reticence to do that. Therein lies the rub.

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A constant budget deficit is always a bad thing.

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Thats why i have millions in the stock market

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From the very limited time I've been here, you guys spew the same headlines that the other side spews...

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No one cares what you think, you TDS f@g.

democrats will lie and complain

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Good Luck.

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With what?