Re: US on the rocks. Rank Order - Current account balance

On Feb 28, 6:34 pm, Tchiowa <tchio...@xxxxxxxxxxx> wrote:
On Feb 27, 9:19 pm, goodsoldierschweik <goodsoldierschw...@xxxxxxxxx>
wrote:



On Feb 27, 5:42 pm, Tchiowa <tchio...@xxxxxxxxxxx> wrote:

On Feb 27, 11:20 am, Chabon 19 <chabo...@xxxxxxxxx> wrote:

On Feb 27, 5:50 am, สับปะรด <sapa...@xxxxxxxxxxxxxx> wrote:

Account balance estimates from CIA World Fact Book ( published 12th
February 2008 )

1st: China with $ 363,300,000,000

2nd: Japan with $ 201,300,000,000

3rd: Germany with $ 185,100,000,000

5th: Russia with $ 74,000,000,000

10th Singapore with $ 41,390,000,000

14th: Canada with $ 28,460,000,000

30th: Thailand with $ 8,619,000,000

161st: United Kingdom with $ -111,000,000,000

163rd ( last place ): United States with $ -747,100,000,000

Rank Order - Current account balance:

https://www.cia.gov/library/publications/the-world-factbook/rankorder...

Current

account balance: This entry records a country's net trade in goods and
services, plus net earnings from rents, interest, profits, and
dividends, and net transfer payments (such as pension funds and worker
remittances) to and from the rest of the world during the period
specified. These figures are calculated on an exchange rate basis,
i.e., not in purchasing power parity (PPP) terms.

https://www.cia.gov/library/publications/the-world-factbook/docs/note...

peace

Thanks for a very interesting fact ***! I am sure that our resident
Mr Tchiowa will find that it is a good thing to be that much indebted

"Indebted"??? Once again you've proven that racists like you aren't
very bright.

The Current Account Deficit is the difference between imported goods
and services and exported goods and services. It has exactly *ZERO* to
do with debt indebtedness.

What it means is that the US has a comparatively high domestic economy
and relatively high wages. China has no domestic economy so the only
place it can sell its goods is overseas. Plus the low wages make their
exports cheap.

The US has run a Current Account Deficit for decades. Too bad you
don't understand what that means.

Thanks for the usual entertainment.

You are stating only part of the explanation.

You are correct in that the current account is the difference between
cost of imports and value of exports but what you ignore is the effect
on the economy of that difference. Since if, as in the case of the
U.S., the current account is a negative i.e., the cost of imported
goods is higher then the value of exports, it means that the
difference must come from the domestic economy.

Yes. Which means you have to have a strong domestic economy if this
happens.

In other words, money
that is created within the country must be exported to pay for goods
imported, which of course reduces funds circulating within the
country.

No. That does not follow.

2 problems with your logic.

1) If the countries that collected the money held the money that would
be true. But in fact the countries (like China) are returning most of
the money in the form of investments. So the money comes back.

2) The domestic money supply can be increased if wealth is created.
Again, a powerful domestic economy solves that.

Most economists seem to feel that this is not a good system.

You are rationalizing.

First, we are talking about current accounts. There is no guarantee
that a country with a positive current account must/will invest in a
country that has a negative current account, thus your first statement
is simply pie in the sky.

Secondly, when you state that China is "investing" in the U.S. what is
actually happening is that they are buying bits and pieces of the U.S.
and thus accelerating the speed with which money flows out. i.e., if a
foreign country buys, say, 10% of Company 'X" it simply means that 10%
of company X's profits flow to the foreign company rather then into
the local economy; in addition to the positive balance of payments it
enjoys from their export/import trade.

Secondly, if, as you state, the U.S. enjoys such a strong "powerful
domestic economy" why is the U.S. continually borrowing on the
international market by issuing government bonds? Certainly if what
you say is correct there would be no need for the, rather, frantic
borrowing that the U.S. engages in.

Further, it is difficult to look at the fairly rapid depreciation of
the US dollar and accept the premise that the US economy is a
"powerful domestic economy. Frankly I would tend to believe that the
U.S. economy better described as "sick" at the moment..

Cheers
.

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