- Joined
- Nov 15, 2009
- Messages
- 13,156
- Reaction score
- 1,038
- Location
- melbourne florida
- Gender
- Male
- Political Leaning
- Very Conservative
the government grew larger than the economy by the end of ww2. or the debt did.
So what is your point?
the government grew larger than the economy by the end of ww2. or the debt did.
Could you expand on this?
Sure!
Assuming a neutral currant account (exports = imports), the only way for the government to run a deficit is via foreign investment and internal investment. However this is not important, just the frame work.
Regardless of the state payments, Current account (CA) + Capital financial account (KFA) = zero; CA + KFA = 0.
The current account is the amount of money flowing into the economy (net exports, net income from abroad, and net unilateral transfers such as payments made abroad; and the capital account is the net flow of "unilateral transfers of assets into the country" such as when a foreigner buys a piece of property or Treasury Bills.
In our situation, we have a negative current account which is exactly (in regards to absolute value) to that of the positive capital account. Because we purchase more (with dollars) from abroad than we export, many of our trading partners are left holding dollars. What do they do with these dollars? They purchase dollar denominated assets such as stocks, t-bills, property etc...
Which is why we are able to run unimaginable deficits.
Note: this is a watered down version:mrgreen:
Sure!
Assuming a neutral currant account (exports = imports), the only way for the government to run a deficit is via foreign investment and internal investment. However this is not important, just the frame work.
Regardless of the state payments, Current account (CA) + Capital financial account (KFA) = zero; CA + KFA = 0.
The current account is the amount of money flowing into the economy (net exports, net income from abroad, and net unilateral transfers such as payments made abroad; and the capital account is the net flow of "unilateral transfers of assets into the country" such as when a foreigner buys a piece of property or Treasury Bills.
In our situation, we have a negative current account which is exactly (in regards to absolute value) equal to that of the positive capital account. Because we purchase more (with dollars) from abroad than we export, many of our trading partners are left holding dollars. What do they do with these dollars? They purchase dollar denominated assets such as stocks, t-bills, property etc...
Which is why we are able to run unimaginable deficits.
Note: this is a watered down version:mrgreen:
Somewhere along the line my brain didn't want to make a connection. You mean a trade deficit allows us to hold more debt? Debt makes debt?
A trade deficit allows foreigners to purchase dollar denominated assets with the dollars they receive (because we are purchasing more than we are selling). The safest place to put money is in government guaranteed assets, such as US Treasury Certificates.
So yes, in essence the trade deficit allows for the government to borrow from foreigners in an efficient fashion.
How many non-existant jobs were saved?...LOL!!!!
So if I give my neighbor a rake and my own Tony notes and he gives me a car, he thinks that it's a good idea to buy some stake in my accounts? What is my neighbors rationale here?
So basically, because the dollar is the currency most international trade is based around, the dollar to keeps its value despite a large debt.
Is this correct?
I would agree if this is your point. The reason the US has remained the top contender in the international economy is not solely based on what it produces, but because it has been the center hub for international trade.
So basically, because the dollar is the currency most international trade is based around, the dollar to keeps its value despite a large debt.
Is this correct?
I would agree if this is your point. The reason the US has remained the top contender in the international economy is not solely based on what it produces, but because it has been the center hub for international trade.
Could this be consistant with the ability of certain products to maintain arificially high prices because of a monopoly or oligoarchy in the market?
To me this is somewhat consistant with other places in the economy with imperfect competition.
Well, the problem with capitalist theory is we assume people are rational and informed. Imperfect competition will occur because people aren't rational nor informed.
I hate to break up this interventionist love-fest, but you don't need prefect competition for capitalism to succeed.
But you still need intervention to have imperfect competition.
Aside from police, military, and courts, proof?
IDK, Glass Steagall :lol:
Adherence to Basel I and II? :lol:
Accurate and honest accounting?
I raise you unemployment insurance!
I double you with a properly functional and staffed SEC!
I hate to break up this interventionist love-fest, but you don't need prefect competition for capitalism to succeed.
Sorry, don't want to sound like a smart ass, but isn't this why imperfect competition would exist?