Spartacus’ Trade War

Spartacus has had enough.  He has been taken advantage of for too many years and he has suffered trade deficits for far too long.  Complaints to the regulators have fallen on deaf ears so now time has come to take the necessary action to put this to an end.

For far too long, Spartacus has run a significant trade deficit with Woolworths and Coles; not only for groceries but for petrol also.

Spartacus keeps buying things from Woolworths and Coles but they never buy anything from him.  Those bastards even occasionally “dump” products in their stores meaning that Spartacus can buy groceries for less than he would normally.  This is completely unsatisfactory.

Effective immediately, pursuant to SEO 1 (Spartacus Executive Order 1), Spartacus has declared a trade war on Woolworths and Coles.  Hence forth, rather than buying quality and (relatively) well priced groceries from these trade cheaters, Spartacus will grow his own fruit, vegetables and meat.  And rather than buying petrol, Spartacus will walk or otherwise ride his 2 wheeled chariot.  Importantly also, when it comes to paper products, particularly of the toilet paper variety, well, the Fairfax papers will be used for their natural purpose.

Yes.  Spartacus will have less leisure time, less disposable income and less grocery choice, but he will no longer have a trade deficit with Woolworths and Coles.  This is a trade war Spartacus can win.

And if a sore “butt” comes to pass, what would be colonic damage.  Sorry.  Collateral damage.

Follow I Am Spartacus on Twitter at @Ey_am_Spartacus

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100 Responses to Spartacus’ Trade War

  1. stackja

    I recently moved and Woolworths and Coles are not my supermarkets.

  2. John Constantine

    All I want for Christmas is to no longer have a trade deficit with my local Stalinist looting cadre of a shire council.

  3. John Constantine

    What happens if somebody turns into a self sufficient prepper that is totally independent of Big Retail?.

    The individual will end up fitter and healthier, but Big Retail will have to bribe their cronies in Big Government to rapidly explode immigration rates, so that mass numbers more customers can be imported to replace the deplorables.

    [ holding woolworths since they floated, but should have dumped them ages ago.]

  4. Marcus

    And you didn’t even mention that since your credit cards are with Coles and Woolworths, they own most of your debt.

  5. candy

    I am not sure if Spartacus is for or against the tariffs, I can’t quite follow what he is saying, it’s really too intricate for me to understand.

    but looking at it all now, it seems Australia will be expected to participate in any war/military exercise America engages in, as a “trade off” for exemptions.

    I think D. Trump is a great deal maker and there is an expectation. It is his way.

  6. MPH

    So Spartacus’ employment rate has gone up and he has more money in his bank account. What’s not to like?!

  7. Rob MW

    For far too long, Spartacus has run a significant trade deficit with Woolworths and Coles; not only for groceries but for petrol also.

    Oh dearie me; so you didn’t give them any money and they didn’t give you any food or petrol ? – what did you expect, Coles & Woolies to just give you the food after they had already paid someone else for it ?

    Bartering and free trading with the value of money mate, try it, you might get something back, you know, like the corresponding value in food or petrol 🙂

  8. MPH

    Spartacus presumably paid with a currency that Coles and Woolies can use elsewhere and don’t represent a future claim on his assets and his alone.

  9. struth

    What on earth was the point to this babble unrelated as it is to international trade that involves communists?

  10. RobK

    Done right, Sparty will experience some of the best tasting, fresh and nutritious vegies he’s ever eaten whilst experiencing a fulfilling hobby. Smarty Sparty will no doubt be bartering his surplus or winning influence and social standing with his generousity.

  11. Siltstone

    oh dear, notice how Spartacus does not say how he/she makes his/her income (or did make their income if now retired) that they spend at Coles or Woolworths. Making steel, aluminium?

  12. Entropy

    Spartacus is a bicycle rider. All is explained.

  13. closeapproximation

    FFS I just want to know if free trade is good or bad. It’s so confusing these days.

  14. Stimpson J. Cat

    ride his 2 wheeled chariot.

    Let me guess, Bikers with Bowties.
    I should have known.

  15. For far too long, Spartacus has run a significant trade deficit with Woolworths and Coles; not only for groceries but for petrol also.

    What are you offering for sale that they refuse to purchase?

  16. Against all odds, this is actually a very witty post. Huzzah, Spartacus.

  17. Aussiepundit

    Against all odds, this is actually a very witty post. Huzzah, Spartacus.

    I agree, it’s very clever. It got me thinking hard about where the metaphor might have holes.

    How about this:

    What’s wrong with charging myself 10 percent of the grocery bill every time I shop at Woolworths and Coles, and putting that cash in a kitty jar in my kitchen for later? Why on earth would the supermarkets care about that?

  18. Spartacus will have less leisure time, less disposable income and less grocery choice, but he will no longer have a trade deficit with Woolworths and Coles.

    I gave up on Colesworth years ago and have been a happy Aldi shopper ever since. Colesworth hates Aldi, which makes things even better. Not only do I get better produce, I also have more leisure time, more disposable income and great grocery choice.

    And guess what, Aldi sources most of their produce from Australian sources, eschewing the cheap and often old produce that Colesworth supplies or supplied (remember that baked fresh daily bread that was sent over frozen from Ireland?). Aldi started the trend of selling local produce and forced Colesworth to begin doing much the same.

    Colesworth took advantage of the lack of tariffs and gave us shit.

  19. herodotus

    I suspect that Spartacus has destroyed all his potential export manufacturing industries and has nothing to sell to his (maligned) trading entities. He probably writes here for free.

  20. Aussiepundit

    I gave up on Colesworth years ago and have been a happy Aldi shopper ever since. Colesworth hates Aldi, which makes things even better. Not only do I get better produce, I also have more leisure time, more disposable income and great grocery choice.

    Hear that whooshing sound?
    That was the entire point of the post flying way over your head.

  21. Ƶĩppʯ (ȊꞪꞨV)

    spartacus is obviously on the dole.

  22. Consumer

    Out here in central Queensland we’ve completely protected ourselves from the obscene filth of international trade. We have no supermarket. No car yard. Our 1973 Malleys was her works fine. As does the 1987 Holden. There was a Chinese restaurant in town but we sent them broke. Now it’s just sausages at the pub, all local. So if that Trump jerk comes this way with his trade deals he’ll get a good dose of Ellen Newman’s vitriol and a quick ride out.

  23. Bruce of Newcastle

    And rather than buying petrol, Spartacus will walk or otherwise ride his 2 wheeled chariot.

    Gaia will be unhappy with you Spartacus. Burning petrol in a car engine is greener that a treadly!

    Analysis: ‘The carbon footprint of riding a sandwich-fueled bicycle could be 30 percent higher than driving’. (8 Mar)

    I hope to go out and insult Gaia at lunchtime to combust my sandwich in a 17 km ride.

  24. Aussiepundit

    Gaia will be unhappy with you Spartacus. Burning petrol in a car engine is greener that a treadly!

    whoosh.

  25. Bruce of Newcastle

    About the essence of Spartacus’ article, Australia actually has a trade surplus.

    We have a stonking great current account deficit though.

    Which doesn’t bother me at all since a lot the current account deficit is actually in the capital account. That figures given the vast swathes of dosh trying to escape China and other politically challenged places.

    What economists can’t do is recognise and account for the intangibles in such things though. The biggest intangible with the capital account is the political risk. Once the value has left China and bought an apartment in Dee Why it is in the clutches of Australian national sovereignty.

    A risked calculation would account for the quite real possibility that all those Chinese assets in Australia will be stolen nationalised without compensation by the government in event of Chinese unpleasantness.

    In turn China, knowing such risks, is frantically ameliorating them by strategic moves such as arranging for Australia to be dependent upon Chinese stuff, or other things within their control like petrol supplies out of Singapore.

    Thus trade deficits are always a distorted image of the reality of realpolitik.

    Which is what Trump is doing.

  26. Texas Jack

    And in news just to hand – China has reverted to Hermit Kingdom status. Western media silence is deafening….

  27. Hear that whooshing sound?
    That was the entire point of the post flying way over your head.

    No wonder economists have such a hard time explaining anything to anyone.

    As I explained, I won my trade war with Colesworth, with no loss of leisure time, income or choice.

    If Spart was saying the same thing (?), why beat around the bush just to try and be funny?

  28. Leo G

    Effective immediately, pursuant to SEO 1 (Spartacus Executive Order 1), Spartacus has declared a trade war on Woolworths and Coles.

    Spartacus Limited is a very limited, inefficient producer of a range of grocery products, a re- packager of newsprint products, and a high-cost alternative energy generator.
    Spartacus has lobbied the Republic of Spartacus to institute trade sanctions against Woolworths and Coles and to subsidise Spartacus Limited produce.
    This is a trade war Spartacus can only win under Weird Trade Organisation Rules.
    But hey, the World’ is really that Weird.
    Go Spartacus!

  29. Bruce of Newcastle

    And in news just to hand – China has reverted to Hermit Kingdom status. Western media silence is deafening….

    So far Xi has only reasserted the Mandate of Heaven. All hail Emperor Ming the Merciless!

  30. Paridell

    Dig for Victory, Spartacus. Watch out for the possums and rabbits.

  31. Aussiepundit

    Surplus or deficit, it doesn’t matter much.

    If your family runs a sandwich shop, then you shouldn’t be buying lunch at your competitor’s shop across the road.

  32. Marcus Classis

    the Fairfax papers will be used for their natural purpose.

    Gold!

  33. Bruce of Newcastle

    Again speaking of trade wars and China, I can recommend the account of John Bell, a Scot who was the accredited ambassador from Peter the Great to the court of the Emperor in Beijing.

    He arrived in Beijing in 1720 tasked to negotiate a trade agreement with the Emperor, who at that time was a Mongol. The Emperor said yes, no worries mate!

    Then the Chinese bureaucracy started their go-slow act.

    It is painful and quite entertaining in a black comedy sort of way to see the travails Bell was put through until he gave up and left.

    Three hundred years late things are exactly the same. Anyone who tries to invest in China gets the treatment. Yes, no worries mate! Then all sorts of things go wrong, until finally the western company gives up, writes off the investment and leaves. Whereupon the Chinese bureaucrat class (now known as the CCP) finds themselves owning a nice new factory!

  34. Leo G

    Western media silence is deafening….

    Terracotta warriors.

  35. John Constantine

    Dinner, their supermarket division is reporting that new checkout robots with better cameras and better artificial intelligence will be able to make unstaffed checkouts work this time.

    Spartacus has a short window to buy all his avocados at onion prices and vine ripened tomatos at non organic price before the scam where Aussie proles have been stealing millions through fooling robot checkouts ends.

  36. max

    Protectionist : Brothers and sisters protect our jobs buy our expensive washing machine!

    FreeMan : Why ? asians are offering better deals.

    Protectionist : they are cheaters and liars; they do not play by the rules.

    FreeMan : Ok we are going to buy your washing machines, but you have to come to eat in our expensive restaurant.

    Protectionist : Are you stupid or what; who are you to tell me where to eat ? I always eat in McDonnell’s. They are cheaper than you and they do not rip me off.



    FreeMan : Then who are you to tell me which washing machine I should buy ?



    Protectionist : HaHaHa you are idiot. We manufacturers are going to bribe government to put sale tax on imports and you will have to buy our washing machine, you will not have choice.

    FreeMan : It sound to me you are selfish man Mr. Protectionist. It was always about you and your expensive job, not about us. You want to be winner and Us to be losers.

    Protectionist : tough luck Losers, you where always slow thinkers.

  37. H B Bear

    Against all odds, this is actually a very witty post. Huzzah, Spartacus.

    Oh dear. This says it all.

  38. Spartacus ought to study and understand a concept before attempting to explain it with humour.
    Spartacus ought to explain from where he got the money to spend at Colesworth.
    Spartacus ought to learn why currencies were floated.
    Spartacus ought to explain what happens to the $800B trade deficit the US suffers every single year.
    Spartacus ought to use humour to explain how is it good for the US to have a GDP growth 4.5% less than it would be if the US didn’t have a trade deficit.

    Going back to Colesworth, Spartacus ought to explain how it’s good for him to keep buying cheap shit from Colesworth on his credit card.
    Spartacus ought to use humour to explain how he will pay off that credit card without reducing his weekly purchasing at Colesworth.

    Spartacus ought to start these posts with “Look, I know fvck all about this subject, but I was bored and wanted to humour my Cat friends by beclowning myself.”

  39. John Constantine

    Skynet.

    I typed skynet and spellcheck made it dinner.

    When will this deficit with spellcheck ever end?.

  40. closeapproximation
    #2658014, posted on March 12, 2018 at 12:45 am

    FFS I just want to know if free trade is good or bad. It’s so confusing these days.

    Trading is good.
    Quotas and currency manipulation have the same effect as tariffs.
    Running endless trade deficits (like the US runs $800B per year deficits) is an economy killer.
    Floated currencies are supposed to level off those unsustainable trade deficits, but the US Dollar is a reserve currency and crooks like China and Japan manipulate their currencies against that reserve, which is the same as putting on tariffs.

    Like Struth said in an earlier thread, buying TVs from China is like buying a stolen TV from a burglar at the pub. Cheaper yes, but would you do it? Should we discourage it?

  41. Judith Sloan
    #2658089, posted on March 12, 2018 at 8:31 am

    Excellent

    I am a fan Judith. On trade there are some things you need to address.
    I commented on previous threads (slyly directed at you) about the elephant in the room, you may not have seen those comments.

    Please address the following:
    * Do you agree that currencies are floated to address trade imbalances?
    * Why is that desirable?
    * Do you agree that floating a currency has the same affect as a tariff, but is market based as opposed to tariffs being artificial impositions that distort the market?
    * Do you agree that no nation can sustain trade deficits equivalent to 4.5% of GDP?

    Until the above are addressed, one must assume a brush up on trade is required.

  42. Spartacus keeps buying things from Woolworths and Coles but they never buy anything from him. Those bastards even occasionally “dump” products in their stores meaning that Spartacus can buy groceries for less than he would normally. This is completely unsatisfactory.

    This is about as illinformed as it gets.

    Does Spartacus realise that he earns money from somewhere by selling his labour and skills?
    Does Spartacus realise that if he spends more at Colesworth (or anywhere else) than he earns, then he is running what is commonly called A FVCKING TRADE DEFICIT?
    Does Spartacus realise running constant trade deficits means he has to either go into debt or reduce his buying at Colesworth?
    Does Spartacus realise that that has the very same effect as a tariff or trade quota? (reducing buying).

    Does Spartacus realise that if Colesworth offered to buy your labour (say stacking shelves after midnight, which seems a fitting job for Spartacus’ skill level) that that is the same as RECIPROCAL TRADE which helps reduce Spartacus’ trade deficit?

    C’Mon Spartacus, keep humouring us.

  43. a happy little debunker

    Looks like Sparty plans on a future of dumpster diving to redress his obvious trading imbalance.

  44. manalive

    Do the protectionist lobby here argue tariffs and other protectionist measures are a necessary evil or are they desirable in themselves and if so desirable for whom? Who benefits?

  45. Lauriesienna

    Spartacus will have less leisure time, less disposable income…… Eh ?… Where does the LESS Income come into it… surely MORE Income ?

  46. manalive
    #2658230, posted on March 12, 2018 at 11:37 am

    Do the protectionist lobby here argue tariffs and other protectionist measures are a necessary evil or are they desirable in themselves and if so desirable for whom? Who benefits?

    I’m all for trade. Even if your trading partner cheats with subsidies and quotas and tariffs. They’re only cheating themselves in the long run.
    Where I part with the Free For All Traders is trade deficits.
    Trade must be reciprocal. No nation can keep running trade deficits. That’s capital leaving the country permanently, impoverishing that nation.

    It’s OK to have deficits with some partners, so long as there are surpluses with others, balancing trade across the cycle.

    The various threads on this topic recently arose due to Trump’s targeted tariff imposition. Free For All Traders immediately evoked their book learned theories without trying to figure out what Trump is trying to do.
    Trump realises that the US can’t keep bleeding $800B per year without impoverishing itself. It’s no coincidence that this bleeding (which was small) accelerated as soon as China was admitted to the WTO.

    Trump is trying to reduce that trade deficit. If he can manage to reduce the deficit by half (by threatening a trade war and bullying) the US will add 2.25% to its GDP, taking it from 2.8% currently to over 5% and beyond.
    An economy the size of the US can sustain some permanent trade deficit (inevitable because the US dollar is a reserve currency) ifits GDP is above 4-5%.

    Free For All Trade dogmatists like Sinclair refuse to address the elephant in the room called trade deficits and how else would they correct it if hey were in Trump’s shoes. It’s easy to criticize, harder to actually be responsible.

  47. I am Spartacus

    Baa Humbug asks many many questions. Here are some Spartacus answers:

    Does Spartacus realise that he earns money from somewhere by selling his labour and skills?

    Yes. What is the point being made with this insight?

    Does Spartacus realise that if he spends more at Colesworth (or anywhere else) than he earns, then he is running what is commonly called A FVCKING TRADE DEFICIT?

    No he does not because that is not a trade deficit. That is Spartacus’ earning/spending (budget) deficit. Spartacus spending more at Colesworth than Colesworth spends at Spartacus Enterprises is a trade deficit.

    Does Spartacus realise running constant trade deficits means he has to either go into debt or reduce his buying at Colesworth?

    No again. This is WRONG. A trade deficit is not the same as a budget deficit.

    Does Spartacus realise that that has the very same effect as a tariff or trade quota? (reducing buying).

    Spartacus does not understand what this means so is unable to respond.

    When Spartacus shops at Coleworth, he pays with Sparty-Dollars, and the management and shareholders of Coleworth don’t eat Sparty-Dollars. They either trade them for something else or they buy other things from people who are prepared to accept Sparty-Dollars.

  48. I am Spartacus

    Dear Baa Humbug

    Trade must be reciprocal. No nation can keep running trade deficits. That’s capital leaving the country permanently, impoverishing that nation.

    Nations can run trade deficits for ever. And no the capital is not leaving forever. It comes back because Current account deficit + capital account deficit = 0. The money spent on Chinese televisions comes back either as education or tourist dollars or otherwise purchases of property, shares, etc.

  49. struth

    Of course we know Spartacus is using Woolies in the ridiculously flawed comparison with China .

    Spartacus keeps buying things from Criminals but they never buy anything from him. Those bastards even occasionally “dump” stolen products in their stores meaning that Spartacus can buy them for less than he would normally, but still more than he might have been able to if the criminals hadn’t killed their competition with unlawful economic terrorist attacks, aided and abetted by the corrupt world police. This is completely unsatisfactory.

    It certainly is.

    Spartacus talks about “cheaper than normal” but can’t tell you what the normal price would be if the competition to Woollies was allowed to operate.
    He basically thinks a monopoly (China) for that’s what , through corruption, they are, is giving him the best deal possible, and if the monopoly dumps some stuff cheaper than it usually does, then that’s a bonus.

    Again all these guys are all about the price, whether the TV is bought down the Pub from the criminal who stole it from their competitors doing the right thing , is not considered.

    What you are missing here is decency, and understanding that when dealing with corruption it will cost you in the long run, much much more than applying a little bit of pressure to help clean up their act.

    Donald Trump did things in a certain order.

    He left the Paris agreement and got the countries energy supply secured and available.
    He then set about reducing taxation and regulation on business.

    He put a tariff on a product or two from a certain suppliers, not all, and meant mainly for China who are winning through corruption and the Global power of the communist/socialist U.N. killing their competition by regulating them out of existence and taking their power supply away.
    The socialists are destroying the west through corruption and winning by killing off competition by corruption not price, and this is so difficult for theorists and people nwho think the west can’t compete because they have a sweat shop view of industry.
    You can’t compete against sweatshops unless we have our own, which is complete bullshit, and history has proven it to be so.

    Always, always take economics advice from a historian over an economist.
    The historian tells you what happened.
    An economist regurgitates what another political hack economist interprets it as happened.
    They all end up with their eyes and bow ties swivelling.

    Remember, Sinclair scoffs at the idea of there being actually bad people out there , and bad countries that wish to do us harm.
    Would you really stick your faith in what guys like him have to say?
    Judith thinks they are some kind of geniuses that are all in fierce agreement.
    Until you wake up to the idea that people aren’t smart just because they tell you they are, neither are you.

  50. Aussiepundit

    The money spent on Chinese televisions comes back either as education or tourist dollars or otherwise purchases of property, shares, etc.

    Not necessarily. If I sell you a sandwich, there’s no guarantee that I’ll buy something off you in return. I might just put that $5 away for a rainy day.

  51. Aussiepundit

    The money spent on Chinese televisions comes back either as education or tourist dollars or otherwise purchases of property, shares, etc.

    Or to put it another way, Australians own Chinese (made) televisions and t-shirts. In return, Chinese now own Australian farms and apartment blocks.

  52. Procrustes

    Good post Spartacus.

    It seems that a lot of commenters here just don’t get gains from trade.

  53. struth

    A Tariff is only one weapon in an economic war, that , by the way, China are using a lot.

    Let’s use another way of explaining it.
    They are also firing weapons of mass destruction of economic war banned by the Geneva convention of trade wars, but the Geneva convention for trade wars are doing nothing about it.
    They are turning a blind eye.
    Australian Prime Minister waves a paper claiming economic peace in our time.
    Let them have the economic Poland, we are getting cheaper economic Volkswagen Beetles.
    The fact that we could be driving just as cheap corvettes doesn’t matter, because well, just don’t be silly.
    Only an economic Hitler can make cars.
    They Economic Geneva Convention are very strict how those at economic war with China behave and have made sure they can only shoot economic slug guns back in retaliatory competition, and are now banning slugs.
    So drive your economically cheap beetles around, rejoice in the fact they are cheap, and let the economic Hitler grow.
    The people that wanted to supply better cheaper products and compete have been forced to shut down.
    This apparently what is called “free trade” to radical libertarian theorists.

  54. I am Spartacus
    #2658263, posted on March 12, 2018 at 12:04 pm

    You put up a post substituting yourself as a trading nation and substituting Colesworth as the trading nation partner.
    You spend money buying things from Colesworth (China) but Colesworth doesn’t buy anything from you (USA). That IS a trade deficit.
    The fact that you don’t comprehend this proves the various points I made above.

    See if you can get your Sparty head around the following.

    After having spent all your (USAs) money at Colesworth (China), and you borrowed more money to give to your fat arsed lazy adult son (unskilled immigrants and lazy unemployed vagina studies graduates) so he can continue to play video games and eat KFC in the basement, THAT’S A BUDGET DEFICIT.

    I am Spartacus
    #2658265, posted on March 12, 2018 at 12:07 pm

    Dear Baa Humbug

    Trade must be reciprocal. No nation can keep running trade deficits. That’s capital leaving the country permanently, impoverishing that nation.

    Nations can run trade deficits for ever. And no the capital is not leaving forever. It comes back because Current account deficit + capital account deficit = 0. The money spent on Chinese televisions comes back either as education or tourist dollars or otherwise purchases of property, shares, etc.

    Oh! lordy lordy (apologies to James Comey) How stupid does one have to be to not see that a trade deficit is precisely the money that hasn’t come back?
    If the money spent on Chinese TVs were coming back THERE’D BE NO TRADE DEFICIT ACROSS THE CYCLE would there?

    See my posts about currency floats and why the US doesn’t benefit from them and hence why the US runs permanent trade deficits.

  55. Procrustes
    #2658283, posted on March 12, 2018 at 12:26 pm

    Good post Spartacus.

    It seems that a lot of commenters here just don’t get gains from trade.

    Don’t put me in that category please (if you have).
    I’m all for trading, even with trade cheaters.
    I part where permanent trade deficits are concerned. Then something must be done to re-balance the deficit.

  56. struth

    It seems that a lot of commenters here just don’t get gains from trade.

    We certainly do understand the benefits from free trade.
    It doesn’t exist, so it’s not what we are talking about here.
    It didn’t exist before the pro west Trump tariff, so what’s your point?

  57. max

    for lovers of :trump,obama,bush,clinton….

    “A government big enough to give you everything you want is a government big enough to take away everything that you have.”

    americans are not free people and neither are australians.

    yes, we are more free than n.korea,china,cuba,venezuela –but for how long?

    socialism/fascism come to america with all wars that they participate in

  58. mh

    You know what they say about people who refer to themselves in the third person.

    Then there are those who refer to themselves in the third person with a made up name. They sound like massive dickheads.

  59. Nero

    A lot of people here seem to favour the imposition of artificial inflation solely aimed at imports. I’m wondering how far they would go? In Australia there is SPC so presumably all imported cans of tomatoes and other fruit are whacked. We have vegemite so presumably all competing condiments are priced up. Cadbury’s tassie factory makes a lot of chocolate so presumably all those Swiss things are hiked. Penguin prints books locally so we can bing a tax on all that foreign stuff. Shut down amazon altogether. Ebay too. Pretty soon all of our lives would be thoroughly local. A bit more expensive. A bit less access to competitive international product. But who cares? We only need to export rocks. Don’t we?

  60. From the horses mouth.
    This is White House Trade Policy Adviser Peter Navarro with Maria Bartiromo.

    https://youtu.be/pgkOBCm0y0g

    It’s only 7 minutes.

  61. I am Spartacus

    From the horses mouth.

    Close, but wrong end.

    Saying it on Fox does not make it true or correct. Just ask this fella.

  62. I am Spartacus

    From the horses mouth.

    at around 4.00

    $1b deficit is by some analysts equates to around 6,000 jobs lost.

    1 – name those analysts. name 2 whose names don’t end in Navarro or Ross or Bannon.
    2 – even accepting that “analysis”, how many jobs were created through the savings from spending less on goods because of trade? and forget about jobs, what about other qualities of life.

    Anyone who wants a Made in Australia iPhone for the bargain basement price of $6,000 or on a monthly plan of $500, please put up your hand.

  63. Infidel Tiger 2.0 (Premium Content Subscribers Only)

    From the horses mouth.
    This is White House Trade Policy Adviser Peter Navarro with Maria Bartiromo.

    Navarro is a deep green lunatic who was once an advisor to Hillary.

    Terrible fella.

  64. I am Spartacus

    Anyone who wants a Made in Australia iPhone for the bargain basement price of $6,000 or on a monthly plan of $500, please put up your hand.

    Oh Baa Humbug.

    Venezuela (who like Zimbabwe) runs a HUGE trade surplus decided to build its own state “managed” mobile phone factory. See here. They wanted to reduce imports and create jobs of course.

    Shall we have an Australian mobile phone factory protected through tariffs and subsidies? Maybe lets put it in South Australia – guaranteed to work under water and without electricity.

  65. I am Spartacus
    #2658413, posted on March 12, 2018 at 2:19 pm

    From the horses mouth.

    Close, but wrong end.

    Saying it on Fox does not make it true or correct. Just ask this fella.

    What has Fox got to do with it? He could have been saying the exact same things on CNN or MSNBC or wherever, and he has been. That video is just the one I happened on today.
    Your frigging bias is showing mate.

    2 – even accepting that “analysis”, how many jobs were created through the savings from spending less on goods because of trade? and forget about jobs, what about other qualities of life.

    Why just spending less on goods? Why not, say, China spending an extra $1B buying American stuff or even property?
    That’s still an extra $1B circulating in the US economy.
    $1B divided by 6000 equals 333,000 per job assumed. Seems more than reasonable to me especially considering the velocity of that $1B.

    Anyone who wants a Made in Australia iPhone for the bargain basement price of $6,000 or on a monthly plan of $500, please put up your hand.

    Strawman to the max.
    Try this instead. Anyone (or nation) who thinks they can spend more than they earn indefinitely, please put up your hand.

  66. Infidel Tiger 2.0 (Premium Content Subscribers Only)
    #2658417, posted on March 12, 2018 at 2:25 pm

    From the horses mouth.
    This is White House Trade Policy Adviser Peter Navarro with Maria Bartiromo.

    Navarro is a deep green lunatic who was once an advisor to Hillary.

    Terrible fella.

    I agree with that regards his antics in California (NIMBY).
    At mo I judge him on the current work he is doing for Trump.

  67. I am Spartacus

    Try this instead. Anyone (or nation) who thinks they can spend more than they earn indefinitely, please put up your hand.

    You are mistaking concepts. Not to mention (conveniently) ignoring that countries have both surpluses and deficits depending on their trading partners. Yes there can be net trade deficits, but that is not income.

    International trade is not a nations only source of income. Even accepting the GDP = C + I + G + X – M, the trade deficit (or surplus) is the X – M bit.

  68. Venezuela (who like Zimbabwe) runs a HUGE trade surplus

    Is that so?
    https://tradingeconomics.com/zimbabwe/balance-of-trade

    You lying to me Sparty?

    Venezuela:
    https://www.statista.com/statistics/370933/trade-balance-of-venezuela/

    Formerly huge trade surpluses have now crashed. Their vast oil reserves had something to do with those surpluses.
    Furthermore, imagine if the Venezuelan currency couldn’t devalue (like the US$ is not allowed to by currency manipulators). Their trade deficit would have hit the roof.

    Try again sunshine.

  69. struth

    Shall we have an Australian mobile phone factory protected through tariffs and subsidies? Maybe lets put it in South Australia – guaranteed to work under water and without electricity.

    Of course we shouldn’t do that.
    We should look at the reasons why we can’t compete.
    Why our hands are tied.
    Then you might see that when you look hard enough, you are buying from those that have corruptly taken away your ability to compete,

    Socialists and anti western forces internally and externally.
    But you think there is nothing wrong with buying from the corrupt because it is the cheapest, and we’ll go off and do something much more productive….
    Maybe we can all become economics professors !
    An education revolution, because we are so smart……………………………

    Common sense normal people know that we have to make things to trade.
    Buying from those that have corruptly stopped us from competing isn’t a free market.

    What products do you think we should produce and what should they?

    Where do you draw the line?

    You can’t, because in a free market the natural advantage over others should be able to sort out who should specialise in what, and who should make what.
    When that is corrupted but you still think you are getting free trade, you are a knob of the first or-derr.

    So there is nothing free market about this while there is not a level playing field, free of corruption.
    The natural process of who makes what, as well as price is corrupted.

    Your position is dangerously anti free trade, if you are happy to buy from corruption.

  70. I am Spartacus

    Try again sunshine.

    You are correct re Zimb. Sparty was sloppy. Re Venezuela, unable to get past paywall.

    However, you are kidding yourself if you think the US can’t devalue its currency. What do you think nil interest rates and “quantitative easing” was.

    And if their trade deficit hit the roof …. so what?

    Are you suggesting that Australia’s key economic challenge is the trade deficit? Above government spending, high levels of taxation, business suffocating regulation and a truly enlightened (ha) energy policy?

    And Navarro – NIMBY in California. NIMBY in Washington.

  71. I am Spartacus
    #2658434, posted on March 12, 2018 at 2:45 pm
    You are mistaking concepts. Not to mention (conveniently) ignoring that countries have both surpluses and deficits depending on their trading partners. Yes there can be net trade deficits, but that is not income.

    International trade is not a nations only source of income. Even accepting the GDP = C + I + G + X – M, the trade deficit (or surplus) is the X – M bit.

    I have not ignored what you claim. I’ve repeatedly referred to the overall US trade deficit of $800B.
    It’s a given that with some there will be a deficit, with others a surplus. What’s important is the end ledger.
    So don’t claim something I haven’t said or ignored.

    For the US, $800B is the equivalent of 4.5% of GDP.
    It’s up to you to make the case that the US can sustain the annual loss of 4.5% of GDP indefinitely.

    Since running these huge deficits, underemployment has grown, wages have been stagnant and growth has been low. These are facts not theories like you put forward.
    Returning some of that deficit to the US will increase GDP. This is a fact not an opinion.

  72. I am Spartacus
    #2658448, posted on March 12, 2018 at 3:01 pm

    Try again sunshine.

    You are correct re Zimb. Sparty was sloppy. Re Venezuela, unable to get past paywall.

    Not just sloppy, lazy. Just put “Venezuela trade balance” into the search engine of choice and inform yourself.
    Or maybe you’re just avoiding admitting the false info you peddled.

    However, you are kidding yourself if you think the US can’t devalue its currency. What do you think nil interest rates and “quantitative easing” was.

    You are uninformed aren’t you?
    The Chinese Renminbi is PEGGED to the US dollar, so it doesn’t matter how much QE the US does, the exchange never adjusts.
    The EU did QE at the same time as the US, so again no adjustment to the exchange rate.
    Japan has been artificially keeping the Yen at about 100 to the dollar for yonks now.

    It’s not just about the currency manipulation either, though that’s important.
    If Australia was to receive Renminbis for the ore she sells, she can only spend those Renminbis with China, meaning a balanced trade eventually. (you stated much the same above).
    However the US dollar is a Global Reserve Currency, meaning it can be spent anywhere in the World, it doesn’t have to go back to the US and it doesn’t. Hence the $800B annual deficit.

    C’mon Sparty, you can do better.

    Are you suggesting that Australia’s key economic challenge is the trade deficit?

    Australia has a trade surplus (coz we dig up dirt and sell it). When that surplus rises to higher levels, the value of the Aussie dollar rises, causing imports to be cheaper and exports to be more expensive, hence bringing the imbalance back to balance.
    That’s how the MARKET BASED mechanism was set-up. Floating currencies with global trade.
    The US dollar does not have that luxury. Geddit?

  73. struth
    #2658443, posted on March 12, 2018 at 2:56 pm
    Says to Sparty…

    you are a knob of the first or-derr.

    Agreed.

  74. struth

    Shall we have an Australian mobile phone factory protected through tariffs and subsidies? Maybe lets put it in South Australia – guaranteed to work under water and without electricity.

    We shouldn’t be deciding this shit.
    We should get the government and U.N. socialist attack and Chinese corruption out of the road and see what the market dictates.

    See how your mind isn’t really free trade at all.
    Let the market develop naturally without it being corrupted, for the best outcomes.

    But right now, we are not allowed to compete, and yet mention tariffs and everyone spoofs on the curtains and throws up in the ashtrays, and reacts like a dancing witch doctor.

    Why are you only wanting to see a little part of a big picture.
    What are you scared of?

  75. I am Spartacus

    Don’t throw rocks Baa – https://tradingeconomics.com/venezuela/balance-of-trade.

    Oh and don’t forget – https://tradingeconomics.com/russia/balance-of-trade

    The problem is that Australia does not make stuff people want to buy at the price Australia can produce at yet we want stuff other people make?

    Sparty says deal with government spending, taxes, regulation, energy.

    What is Baa’s proposal?

  76. struth

    The problem is that Australia does not make stuff people want to buy at the price Australia can produce at yet we want stuff other people make?

    Sparty says deal with government spending, taxes, regulation, energy.

    You weren’t saying that at all.
    We were saying that.
    You were sarcastically (and failing) trying to point out the error of the realists ways by quoting a domestic exchange and applying it to global trade involving communists and socialist corruption.

  77. I am Spartacus
    #2658487, posted on March 12, 2018 at 3:50 pm
    Sparty says deal with government spending, taxes, regulation, energy.

    What is Baa’s proposal?

    Struth beat me to it.
    I’ll try to be more specific.

    Venezuela wasted it’s foreign reserves. Now it can’t even import toilet paper.
    Any nation that continually runs trade deficits will eventually run out of foreign currency to trade with. Surely you understand that concept.

    The US doesn’t run out of foreign currency because the US $ IS a foreign currency. But it still bleeds $800B per year.

    So answer these very very simple questions.
    If that $800B was spent back in the US, would the US benefit?
    Is the reverse not true when that money is kept in the foreign reserve vaults of just about every nation on Earth?

    What is Baa’s proposal?

    I’ll wait and see how Trumps strategy works. I believe it will work enough to get at least half of that $800B back to the US increasing annual GDP by 2.25%. Nice.
    If it fails, a whole new way of doing things must be looked at.

  78. Doug1943

    It seems that some of Spartacus’ readers are suffering from Irony Deficiency Disorder. Wait till they read the complaint of the French candle-makers about unfair competition.

  79. Chris M

    So get off your ass and do some business with them, I do. Don’t subscribe to any leftmedia but I do business with them each year also.

  80. max

    Baa Humbug say:
    “Where I part with the Free For All Traders is trade deficits.”

    Let’s put trade deficits into historical perspective. If trade deficits were something for a president to fret about, every U.S. president from 1790 to today ought to have been fretting. For most of our history, we have had current account deficits .
    I should say every president except Herbert Hoover and Franklin D. Roosevelt, whose administrations ushered in the Great Depression.
    Nine out of the 10 years of the economic downturn of the 1930s, our nation had a current account trade surplus. Should we reproduce the economic policies of that era and re-create the “wonderful” trade surplus?

    https://www.lewrockwell.com/2017/05/walter-e-williams/the-us-is-protectionist/

    -in the fiat-money era, balance of payments deficits are truly meaningless
    -the absurdity of worrying about the balance of payments is made evident by focusing on inter-state trade. For nobody worries about the balance of payments between New York and New Jersey, or, for that matter, between Manhattan and Brooklyn, because there are no customs officials recording such trade and such balances.
    The international gold standard provided an automatic market mechanism for checking the inflationary potential of government. It also provided an automatic mechanism for keeping the balance of payments of each country in equilibrium.

    I bought bicycle from china for $500.
    I get bicycle
    chinamen get $500

    what is a problem?
    did I run trade deficit?
    what is he going to do with $ 500 ?

    who is loser ?
    domestic manufacturer of bicycle –he was asking $1500
    who is winner ? me I saved $1000
    who else is winner ? all cake shop and wine shops in australia.

  81. max
    #2658992, posted on March 13, 2018 at 12:01 am
    Nine out of the 10 years of the economic downturn of the 1930s, our nation had a current account trade surplus. Should we reproduce the economic policies of that era and re-create the “wonderful” trade surplus?

    Silly strawman argument. The great depression wasn’t about trade nor is anyone suggesting we should create a depression to reign in the current account. Try not to waste both our time please.

    The international gold standard provided an automatic market mechanism for checking the inflationary potential of government. It also provided an automatic mechanism for keeping the balance of payments of each country in equilibrium.

    And yet the US was on the gold standard during the great depression. Do you see the fallacy of your argument?
    Floating currencies are supposed to be the market mechanisms of today, to keep balance of payments in equilibrium across the cycle. It certainly works for Australia. As soon as commodity prices go up, our balance of payments position improves, our dollar increases in value making exports more expensive and imports cheaper. Our balance of payments position returns to equilibrium. Good mechanism BUT IT DOESN’T WORK FOR THE US $ because the US $ is a reserve currency.

    Just like your silly bike example above, what does China do with the US $s? She spends them with the Arabs for oil and Aussies for ore. She doesn’t have to spend them back in the US like she would need to spend Aussie $s back in Oz.
    Trillions in US $s are kept in Federal Reserves of just about every country on Earth.
    The only reason the US GDP hasn’t tanked and the US $ hasn’t crashed is because foreign reserve banks are buying US Treasury Notes to the tune of Trillions of $s.
    Instead of getting those 800B US $s back to the US with better trade deals, the US gets them back by swapping them with Trasury Notes. That’s DEBT.
    Running large current account deficits and covering those with Treasury notes is NOT sustainable.
    This is not controversial, but don’t take my word for it….

    “America’s Unsustainable Current Account Deficit”
    In Is the U.S. Current Account Deficit Sustainable? And If So How Costly Is Adjustment Likely to Be? (NBER Working Paper No. 11541), Edwards provides a detailed analysis that culminates in blunt answers to these questions: No, it is not sustainable and the adjustment, if history is any guide, is likely to be “painful and costly,” causing U.S. economic output, measured as gross domestic product or GDP, to plummet. “The results from this investigation indicate that major current account reversals have tended to result in large declines in GDP,” Edwards writes. “These estimates indicate that, on average…the decline in GDP growth per capita has been in the range of 3.6 to 5 percent in the first years of adjustment. Three years after initial adjustment, GDP growth will still be below its long-term trend.”

    https://www.nber.org/digest/mar06/w11541.html

  82. max
    #2658992, posted on March 13, 2018 at 12:01 am
    I bought bicycle from china for $500.
    I get bicycle
    chinamen get $500

    what is a problem?
    did I run trade deficit?
    what is he going to do with $ 500 ?

    He is going to buy oil from the Arabs and ore from Brazil. We know this to be true because the US is running an $800B deficit, meaning the money isn’t coming back.

    who is loser ?
    domestic manufacturer of bicycle –he was asking $1500
    who is winner ? me I saved $1000
    who else is winner ? all cake shop and wine shops in australia.

    Not to mention the worker in the cycle shop, the owner of the building who leases it, the transport company that transports the parts and the parts suppliers.
    The accountant of the cycle shop, the office supplies shop down the road, the utilities provider and on and on.
    But wait, there’s more.
    When that cheap Chinaman bike of yours collapses under you within 12 months, you’re going to spend another $500 to buy another one. Now you’ve saved only $500 but the economy has lost $1000.
    Those cheap toys that break within a week, the white goods that have a quarter of the life-span of their predecessors, the spanner that buckles on first use, on and on and on.

    We can play this game ad nauseam.

  83. max

    Baa Humbug say:
    “The great depression wasn’t about trade”

    
Max say:
    let me see:
    
The Tariff Act of 1930 otherwise known as the Smoot–Hawley Tariff or Hawley–Smoot Tariff, was an act implementing protectionist trade policies sponsored by Senator Reed Smoot and Representative Willis C. Hawley and was signed into law on June 17, 1930. The act raised U.S. tariffs on over 20,000 imported goods.

    Baa Humbug say:
    “And yet the US was on the gold standard during the great depression.”

    Max say:
    let me see:

    The timing of the Great Depression varied across nations; in most countries it started in 1929 and lasted until 1941

    On March 4, 1933, Franklin D. Roosevelt became president for the first time, promising an “adequate but sound” currency. The next day, a Sunday, he closed the nation’s banks. “We are now off the gold standard,” he privately declared to a group of advisers.

    Baa Humbug say:
    “Just like your silly bike example above, what does China do with the US $s? She spends them with the Arabs for oil and Aussies for ore.”

    Max say:
    let me see:
    chines buy arab oil –arab go to america to buy american weapons
    you see american dollars will eventually end up in america.

    Baa Humbug say:
    “the US is running an $800B deficit, meaning the money isn’t coming back.”


    Max say:
    let me see:

    money always come back.
    if not by chinese than by someone else.

    
Baa Humbug say:
    “We can play this game ad nauseam.”

    Max say:

    yes we can,Bob

  84. Max say:
    let me see:
    chines buy arab oil –arab go to america to buy american weapons
    you see american dollars will eventually end up in america.

    and

    let me see:

    money always come back.
    if not by chinese than by someone else.

    First, your mannerism is giving me the shits. Either be civil or I end discussion.
    Second: The fact that the US has been running substantial deficits puts a lie to your assertion above.
    What do you think the trillions in US$s held in foreign reserves are, pork chops?
    Third: TheGreat Depression started with a run on the Banks in 1929. FDR didn’t act on the Gold standard until 33, 4 years after the turmoil started. 4 years is a long time in an economy.
    All the various stupid economic decisions were made in a panic, including Smoot-Hawley after the disaster started.

    Your original claim that trade deficits didn’t matter and that during depressed years there was a trade surpluss was and is a strawman. Now we’re into discussing the causes and effects of the Great Depression.
    Well done on deflection. I’ve debated rabid Global Warming alarmists who couldn’t deflect as well as you, though they were very good at it.

    Until you accept your fallacy that US $s always come back, proven by the fact that foreign reserve banks are holding vast stores of US $ and only sending some back in exchange for US Treasury notes, then debating with you is a waste of time. Pig headedness is no way to debate.

  85. max

    Baa Humbug say:
    “Your original claim that trade deficits didn’t matter”
    trade deficits don’t matter,you did not read whole article:

    Trade Ignorance and Demagoguery
    By Walter E. Williams
    When we discuss international trade and balance of payments, there are two types of accounts. There is the current account, which includes goods and services imported and exported and receives the most political attention. In 2016, the American people imported $479 billion worth of goods and services from Chinese producers, and we sold $170 billion worth of goods and services to Chinese customers. That made for a $309 billion current account deficit. In other words, we purchase more goods and services from Chinese producers than Chinese consumers purchase from American producers.
    How much of a problem is it when there is a deficit, or a negative imbalance, on current accounts? Let’s look at it.
    I buy more from my grocer than he buys from me. Our Department of Defense buys more from General Dynamics than General Dynamics buys from our Department of Defense. With just a bit of thought, one could come up with thousands of examples in which one party buys more from another than that party buys from it — creating deficits in current accounts. But a current account deficit is always offset by a surplus somewhere else.
    That somewhere else is known as the capital, or financial, account. This account consists of direct foreign investment, such as the purchase or construction of machinery, buildings or whole manufacturing plants. The capital account also consists of portfolio investment, such as purchases of stocks and bonds. In our capital account, the U.S. has a huge surplus with China. That means
    money is flowing into our country from China. In other words, Chinese people are investing more money into the U.S. — in the forms of home and factory purchases, stocks, and bonds — than Americans are investing in China. Of necessity, the deficit that we have with China on our current account, ignoring timing issues, must equal the surplus we have with China on our capital account.
    It turns out that foreigners own $30 trillion worth of U.S. assets, such as stocks, Treasury bonds, manufacturing plants and real estate. One of the reasons that foreigners hold so much U.S. capital is that our country is one of the world’s most attractive places to invest. Secondly, our capital markets, unlike our goods markets, are open to foreigners. Foreigners can buy and sell any U.S. asset in any quantity, except in cases in which national security is an issue. One of the troubling aspects of foreign confidence in America is that foreigners invest so much in U.S. Treasury bonds. That in turn gives the U.S. Congress greater latitude to engage in profligate spending. Japan owns $1.1 trillion worth of U.S. Treasury bonds, and China owns $1 trillion.
    What about President Donald Trump’s call to reduce our current account trade deficit? By the way, we know that we’re being deceived when a politician talks only about the current account deficit, without a word about the capital account surplus. If foreigners sell us fewer goods, they will earn fewer dollars. With fewer dollars, they will be able to make fewer investments in America. But that’s fine with politicians. The beneficiaries of trade restrictions are visible. Tariffs on tires, clothing and electronics will mean more profits and jobs and more votes for politicians. The victims of trade restrictions, such as people in the real estate market and other areas where foreigners are investing, are less visible. Last year, Chinese citizens alone purchased record amounts of residential and commercial real estate, bringing their five-year real estate investment total to more than $110 billion.
    Let’s put trade deficits into historical perspective. If trade deficits were something for a president to fret about, every U.S. president from 1790 to today ought to have been fretting. For most of our history, we have had current account deficits (http://tinyurl.com/jczqrhu). I should say every president except Herbert Hoover and Franklin D. Roosevelt, whose administrations ushered in the Great Depression. Nine out of the 10 years of the economic downturn of the 1930s, our nation had a current account trade surplus. Should we reproduce the economic policies of that era and re-create the “wonderful” trade surplus?
    https://www.lewrockwell.com/2017/05/walter-e-williams/the-us-is-protectionist/


    US $s always come back:


    yes always:
current account deficit is always offset by a surplus somewhere else.
    That somewhere else is known as the capital, or financial, account. This account consists of direct foreign investment, such as the purchase or construction of machinery, buildings or whole manufacturing plants. The capital account also consists of portfolio investment, such as purchases of stocks and bonds. In our capital account, the U.S. has a huge surplus with China. That means
    money is flowing into our country from China. In other words, Chinese people are investing more money into the U.S. — in the forms of home and factory purchases, stocks, and bonds — than Americans are investing in China. Of necessity, the deficit that we have with China on our current account, ignoring timing issues, must equal the surplus we have with China on our capital account.
    It turns out that foreigners own $30 trillion worth of U.S. assets, such as stocks, Treasury bonds, manufacturing plants and real estate. One of the reasons that foreigners hold so much U.S. capital is that our country is one of the world’s most attractive places to invest. Secondly, our capital markets, unlike our goods markets, are open to foreigners. Foreigners can buy and sell any U.S. asset in any quantity, except in cases in which national security is an issue. One of the troubling aspects of foreign confidence in America is that foreigners invest so much in U.S. Treasury bonds. That in turn gives the U.S. Congress greater latitude to engage in profligate spending. Japan owns $1.1 trillion worth of U.S. Treasury bonds, and China owns $1 trillion.

  86. max

    Trade exists because the parties to the trade see an advantage to doing so, not because it is “good for the country.”

    Protectionists of all stripes often rail about trade deficits. An unfavorable balance of trade. One of the catch phrases of these people, because at some level they realize the value of trade, is that they want “fair trade.” That’s just protectionism under the guise of being pro-free trade.
    One of Donald Trump’s bugaboos is trade with China. On the Trump website it says “for free trade to bring prosperity to America, it must also be fair trade. Our goal is not protectionism but accountability.”
    And Hillary Clinton, in her nomination speech at the DNC, said “we should say ‘no’ to unfair trade deals… we should stand up to China.”
    Those dastardly Chinese just don’t play fair!
    Alleged currency manipulation is part of his objection to the Chinese. The Chinese renminbi was pegged to the dollar until 2005. There was considerable hue and cry in the States that the Chinese currency was overvalued. It was alleged that this created a trade imbalance.
    The Trump website goes further. “In a system of truly free trade and floating exchange rates like a Trump administration would support, America’s massive trade deficit with China would not persist.”
    Balance of trade! That old bugaboo.
    Ironically, proponents of free trade often make the same mistaken argument. They support free trade because they believe that their country will be a winner. They will win the “trade wars” and have a favorable balance of trade. The country’s exports will exceed its imports which will be good for everyone.
    But the idea that trade has to be balanced, that the amount of imports and the amount of exports should match is, on the face of it, a load of malarkey.
    Frederic Bastiat vs. the Protectionists
    Nobody has explained this fallacy better than Frederic Bastiat, the brilliant 19th century French economist and polemicist. Bastiat’s forte is the reductio ad absurdum. He takes the position of the protectionists and draws it out to its logical conclusion. His petition of the “Manufacturers of Candles, Tapers, Lanterns, Candlesticks, Street lams, Snuffers and Extinguishers, and the Producers of Tallow, Oil, Resin, Alcohol, and Generally of Everything Connected with Lighting” against the competition of the sun is a classic. His proposal of a “negative railroad” skewers his opponents mercilessly.
    His attack on the notion of a balance of trade is equally devastating and equally hilarious. It made me laugh out loud when I read it. Speaking of one of the protectionists, a Monsieur Lestiboudois, he says, “he believes and loudly proclaims that if France gives ten in order to receive fifteen, it loses five.” In other words, if France exports say, ten million francs of goods and imports fifteen million, France is out five million francs.
    He quotes this trade critic at length with the conclusion that when trade is not balanced, the deficit is money that is given away. “Every year we give away 200 million francs to foreigners.
    The Trade Balance and the Businessman
    The theories of the free traders are attacked as valid only in theory by the protectionists, but, asks Bastiat, “do you think the account books of businessmen are valid in practice?”
    If there’s anyone who understands profit and loss, surely it is the businessman. So, says Bastiat, consider the case of one of his businessman friends who he refers to by his initials, M.T.. Let’s compare M.T.’s accounting to that of the customhouse.
    “M.T. despatched a ship from Le Havre to the United States with a cargo of French goods, chiefly those known as specialties of French fashion, totalling 200,000 francs. This was the amount declared at the custom house.”
    Now after arriving at New Orleans, paying the shipping charge and an American tariff, M.T. still manages to sell the French fashions for a profit of twenty per cent or 40,000 francs. The return of his original investment, the shipping costs, the tariff and his profit nets him 320,000 francs which he uses to buy cotton.
    In addition, M.T. had to pay for shipping the cotton back to France, commissions, insurance and so forth bringing the cost of the cotton to 352,000 francs. And that is what the customhouse entered into its books as the value of the imported cotton.
    M.T. sells the cotton and nets another 70,400 francs in profit. M.T. is up 40,000 francs on the sale of French fashions to the Americans and 70,400 francs on the sale of American cotton to domestic French consumers. He has profited to the tune of 110,400 francs! Not a bad business trip!
    But in the accounts of the French customhouse, France has exported 200,000 francs and imported 352,000 francs. Oh my god! It’s a trade deficit! France just got snookered out of 152,000 francs! Or as Bastiat puts it, the esteemed trade critic must conclude that France “has consumed and dissipated the proceeds of previous savings, that it has impoverished and is on the way to ruining itself, that it has given away 152,000 francs of its capital to foreigners!” (italics in the original).
    Throw it into the sea!
    But Bastiat is not done yet! It seems M.T. despatched another ship shortly thereafter with another 200,000 francs of goods. Sadly, the ship sank and M.T. had no choice but to enter into his accounts a loss of 200,000 francs.
    The good gentleman at the customhouse, however, entered the shipment as 200,000 francs in the export ledger before the ship sailed. But because it sank, there will never be anything entered in the import ledger to counter it. “It follows,” says Bastiat, “that M. Lestidoubois and the Chamber will view this shipwreck as a clear net profit of 200,000 francs for France!”
    But wait! Bastiat is still not done! “There is still a further conclusion to be drawn from all this, namely, that, according to the theory of the balance of trade, France has a quite simple means of doubling her capital at any moment. It suffices merely to pass its products through the customhouse, and then throw them into the sea. In that case the exports will equal the amount of her capital; imports will be non-existent and even impossible, and we shall gain all that the ocean has swallowed up.”
    Indeed, when someone sells something, whether to a domestic or foreign consumer, he does so to make a profit or he wouldn’t make the trade. Conversely, when someone buys something, whether from a domestic or foreign consumer, he does so because he sees it as advantageous. Trade exists because the parties to the trade see an advantage to doing so, not because it is “good for the country.
    Indeed, we could go further and argue that if we need a balance of trade between countries, why not between the states? Why shouldn’t New York insist that the value of movies it imports from Hollywood be balanced out by an equal value of manufactured goods exported to California? To ask the question is to see its absurdity.
    https://fee.org/articles/how-bastiat-toppled-the-balance-of-trade-bugaboo/

  87. Ƶĩppʯ (ȊꞪꞨV)

    The capital account also consists of portfolio investment, such as purchases of stocks and bonds. In our capital account, the U.S. has a huge surplus with China. That means
    money is flowing into our country from China. In other words, Chinese people are investing more money into the U.S. — in the forms of home and factory purchases, stocks, and bonds — than Americans are investing in China. Of necessity, the deficit that we have with China on our current account, ignoring timing issues, must equal the surplus we have with China on our capital account.
    It turns out that foreigners own $30 trillion worth of U.S. assets, such as stocks, Treasury bonds, manufacturing plants and real estate. One of the reasons that foreigners hold so much U.S. capital is that our country is one of the world’s most attractive places to invest.

    SO with money the chicoms made using ideas they stole from us they come back and buy us out.

    Sounds reasonable.

  88. max

    Milton Friedman – Free Trade
    In the international trade area, the political rhetoric is almost always about how we must export, and what’s really good for America is an industry that produces exports. And if we buy from abroad and import lots of goods from countries like China, Japan and Mexico, that’s supposed to be bad. We are getting “hosed” in the words of Donald Trump.
    But clearly that’s backwards and upside-down thinking. After all, the goods we send abroad to other countries we now can’t eat ourselves, we can’t wear, and we can’t use for our homes and households. Simply put, the goods and services we export and send abroad are goods and services not available to us. On the other hand, the goods and services we import from China, Japan and Mexico provide Americans with TV sets we can watch, automobiles we can drive, food we can eat, with all sorts of nice things for us to use.
    Here are two important points about trade that Mr. Trump needs to understand: 1) the economic gain to Americans from foreign trade is what we import from countries like China, Japan and Mexico and 2) what we export is the cost of getting those imports. And the proper objective for a nation as Adam Smith put it, is to arrange things, so we get as large a volume of imports as possible from China, Japan and Mexico, for as small a volume of our exports as possible.
    This carries over to the terminology we hear Mr. Trump and politicians use. When people talk about a favorable balance of trade, what is that term taken to mean? It’s taken to mean that we export more than we import. But from the point of view of our economic well-being and our standard of living, that’s an unfavorable balance. That means we’re sending out more goods and getting fewer in return. Each of you in your private household would know better than that. You don’t regard it as a favorable balance when you have to send out more goods to get less coming in. It’s favorable when you can get more by sending out less.

  89. max

    In 2016, the US exported goods and services equal to $2.209 trillion, and imported goods and services with a market value of $2.712 trillion. The balance of trade deficit for 2016, therefore, came to $502.3 billion.

    When they talk about a favorable balance of trade, what is that term taken to mean? It’s taken to mean that we export more than we import. But from the point of view of our economic well-being and our standard of living, that’s an unfavorable balance. That means we’re sending out more goods and getting fewer in return. Each of you in your private household would know better than that. You don’t regard it as a favorable balance when you have to send out more goods to get less coming in. It’s favorable when you can get more by sending out less.

    https://fee.org/articles/trade-deficits-don-t-matter-unless-caused-by-government/

  90. max

    Trade Deficits Don’t Matter
    Donald Trump has demonstrated his profound misunderstanding of the basic economic principles of international trade for several years now, and perhaps reached a pinnacle when he told the New York Daily News in an interview last August that “we’re getting hosed by the Chinese — and that we’ve done it with our eyes wide shut.” Here’s more of Trump from that interview, further demonstrating his clueless and child-like misunderstanding of international trade:
    “What China has done to America?” he raged. “The money and the jobs they’ve taken from us? It is the greatest single theft in the history of the United States.” In other words, China is to the United States as Bernie Madoff is to investors. “And Japan is almost as bad,” he stormed. “Japan sells us millions of cars — and we sell them wheat!
    MP: Alternatively, we might say “What the US has done to China? The manufactured goods we’ve taken from them? It is the greatest single theft in the history of China.” In other words, the United States is to China as Bernie Madoff is to investors. Here’s more from the interview:
    “I’ve been saying for years that China would take us down. Why? Because our leaders are stupid and China’s leaders are smart. They sell to us, no taxes, no nothing. We sell them 10% of what they sell us. Ninety percent to 10%! It’s crazy. Our trade deficit with China is like having a business that continues to lose money every single year. Who would do business like that?”
    Peter Navarro, in his Wall Street Journal opinion piece earlier this week (see related post here) demonstrated his fundamental misunderstanding of international trade when he opened his op-ed with the following question: “Do trade deficits matter?” Just to ask the question is to admit one’s ignorance of trade theory, which has been pretty settled on this topic since Adam Smith taught us in 1776 that “Nothing…can be more absurd than this whole doctrine of the balance of trade.”
    To help Mr. Trump and Mr. Navarro with their “understanding deficit” about international trade theory and trade deficits, it’s a good time to invoke the timeless wisdom of Milton Friedman (featured here), presented below as a remedial refresher on some of the most basic principles of international trade (updated for today):
    In the international trade area, the political rhetoric is almost always about how we must export, and what’s really good for America is an industry that produces exports. And if we buy from abroad and import lots of goods from countries like China, Japan and Mexico, that’s supposed to be bad. In the words of Donald Trump, we are getting “hosed,” “ripped off,” “crushed,” and killed” by our trade partners who then laugh at us as they supposedly steal our jobs.
    But clearly that is backwards and upside-down thinking. After all, the goods we send abroad to other countries we now can’t eat ourselves, we can’t wear, and we can’t use for our homes and households. Simply put, the goods and services we export and send abroad are goods and services not available to us. On the other hand, the goods and services we import from China, Japan, Germany and Mexico provide Americans with TV sets we can watch, automobiles we can drive, food we can eat, with all sorts of nice things for us to use.
    Here are two important points about trade that Mr. Trump and Mr. Navarro need to understand: 1) the economic gain to Americans from foreign trade is what we import from countries like China, Japan and Mexico, and 2) what we export is the cost of getting those imports. And the proper objective for a nation as Adam Smith put it, is to arrange things, so we get as large a volume of imports as possible from China, Japan and Mexico, for as small a volume of our exports as possible.
    This carries over to the terminology we hear Mr. Trump and Mr. Navarro use. When they talk about a favorable balance of trade, what is that term taken to mean? It’s taken to mean that we export more than we import. But from the point of view of our economic well-being and our standard of living, that’s an unfavorable balance. That means we’re sending out more goods and getting fewer in return. Each of you in your private household would know better than that. You don’t regard it as a favorable balance when you have to send out more goods to get less coming in. It’s favorable when you can get more by sending out less.
    Q.E.D.

    https://fee.org/articles/trade-deficits-dont-matter-understanding-deficits-do/

  91. Ƶĩppʯ (ȊꞪꞨV)

    Here are two important points about trade that Mr. Trump needs to understand: 1) the economic gain to Americans from foreign trade is what we import from countries like China, Japan and Mexico and 2) what we export is the cost of getting those imports. And the proper objective for a nation as Adam Smith put it, is to arrange things, so we get as large a volume of imports as possible from China, Japan and Mexico, for as small a volume of our exports as possible.

    So the more they steal from us the better off we are, you say. Makes perfect sense.

  92. max

    Ƶĩppʯ (ȊꞪꞨV)

    You don’t regard it as a favorable balance when you have to send out more goods to get less coming in. It’s favorable when you can get more by sending out less.

  93. max

    In 2016, the US exported goods and services equal to $2.209 trillion, and imported goods and services with a market value of $2.712 trillion.

    you get more than you send out capisce padre

  94. Ƶĩppʯ (ȊꞪꞨV)

    You don’t regard it as a favorable balance when you have to send out more goods to get less coming in. It’s favorable when you can get more by sending out less.

    Ignoring the issue of rampant IP theft for a moment, since economists refuse to consider it.

    So ideally in theory, we should buy nothing and send out boatloads of cash to buy everything.

    Apparently there are no adverse consequences to this scenario. And this boatload of cash comes back every year to buy businesses, land and debt. you are claiming this can just go on ad infinitum, we have an infinite supply of land and businesses to sell and a printing press to churn out infinite money.

    Nothing can go wrong in this idealised world?

  95. Ƶĩppʯ (ȊꞪꞨV)

    Let’s put some figures in this ideal world where the US sells nothing and buys everything.

    On a $10trillion economy that would be close to $3t trade deficit which we are told doesn’t matter. So every 3 years the equivalent of the entire US GDP would be looking for a home. Obviously there is nothing wrong with this picture.

    The total US market cap is around $20t, so in less than a decade there would be enough dollars sloshing around from the trade deficit to buy all listed US companies. Obviously that’s fine too.

    the total US real estate is around $30t. Another decade and the surplus boatloads would be able to buy all US real estate. Hey the yanks can rent.

    Obviously there is nothing wrong with this picture. What if we only allow the trade surplus to be used only to buy gov debt. After a mere decade the US gov would be paying interest on close to 3 times its GDP.

    Ill leave it as an exercise for the gentle reader to calculate how many decades it takes before a problematic portion of gov tax is used to service this debt at various rates of interest.

  96. max

    “Suppose, if that amuses you, that the foreigner inundates us with all sorts of useful commodities without asking in return — that our imports are infinite and exports nil. I defy you to prove to me that we should be poorer on that account.”
    Frédéric Bastiat

    If I want to learn investing I should be wise to learn from Warren Buffett.

    Now you are saying to learn economy I should learn from Ƶĩppʯ (ȊꞨV).

    Ƶĩppʯ (ȊꞨV) …. Who ???? 

never heard of him.

    do not be embarrassed it is same for Max.

    Max… who ??? never heard of him.

  97. Ƶĩppʯ (ȊꞪꞨV)

    I really don’t see how that addresses the problem of all this external money looking for a way back into the US. In the long run, the sheer volume of cash involved relative to GDP is mind boggling.

    Perhaps you can answer the question instead of quoting dogma.

  98. Ƶĩppʯ (ȊꞪꞨV)

    Bueler… bueler….anybody

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