A comsuming question

[Rubia Warren]

I have a question: if we are producing less than what we consume (I dunno if this is entirely accurate, but last I heard it was 30-something percent of what we consume), and are dependent on other countries in the world for things, what benefits or consequences can that possibly have for the future in living this way?

[Ryokan]

I have a question: if we are producing less than what we consume (I dunno if this is entirely accurate, but last I heard it was 30-something percent of what we consume), and are dependent on other countries in the world for things, what benefits or consequences can that possibly have for the future in living this way?
We'd have to pay them back. Now, if most of the stuff we are borrowing to buy is better machinery, training, or other productivity increasing things, then we are better of borrowing now and paying later. But if we are blowing it on Twinkies, then our kids are going to have to deal with high interest rates in the future, meaning its harder to get a car, house, etc. Part of the reason that is happening, though, is that we have an artifically strong dollar, China manipulates there currency to create a trade deficit, and Americans like government services but hate taxes.

[Rubia Warren]

We'd have to pay them back. Now, if most of the stuff we are borrowing to buy is better machinery, training, or other productivity increasing things, then we are better of borrowing now and paying later. But if we are blowing it on Twinkies, then our kids are going to have to deal with high interest rates in the future, meaning its harder to get a car, house, etc.
I meant that- the twinkies. If we rely on foreign countries to prduce what we consume, doesn't that make us dependent on them to produce our wants and necessities? By trading that way, it does seem to mean a good deal for the US, and it does seem to mean that we each (the nations) have more of a sort of vested interest to get along, (since we are buying and consuming their stuff, they are making money from us, and since they are manufacturing the stuff, we can do other things and still have cheap stuff). Since we have a service-oriented economy, what services do they receive from us? In what way does it even out?

Part of the reason that is happening, though, is that we have an artifically strong dollar, China manipulates there currency to create a trade deficit,

Can you explain those things to me? Thanks for putting up with me, Ryokan. :flowers:

[Ryokan]

I meant that- the twinkies. If we rely on foreign countries to prduce what we consume, doesn't that make us dependent on them to produce our wants and necessities? By trading that way, it does seem to mean a good deal for the US, and it does seem to mean that we each (the nations) have more of a sort of vested interest to get along, (since we are buying and consuming their stuff, they are making money from us, and since they are manufacturing the stuff, we can do other things and still have cheap stuff). Since we have a service-oriented economy, what services do they receive from us? In what way does it even out? Well, they recieve high tech manufacturing, money management, organization, etc. The US is like the corporate HQ for the global economy, in alot of ways. We insure, provide consulting for. bank for, develope technology for, and manage alot of business around the world. And while you can't hold these things in your hand, they are just as vital as factories to producing every day goods. If they closed there factories, we'd And remember, while they make our T-Shirts, often we grow there food, so its a give take situation.



Can you explain those things to me? Thanks for putting up with me, Ryokan. :flowers: Okay La Rubia, real quick. Do you expect me to speak Spanish? I hope not, cuz I can't. But you can. By the same token, do I expect you, a non econ major to understand stuff I, an econ major, don't always understand myself? Nope. There is nothing to put up with.
Secondly, here's what happen's. The US, by printing fewer dollars, keeps the dollars value high. Indoing that, this makes foriegn goods cheaper in the US, because dollars are worth more vs. foriegn currencies. So this helps consumers who want foriegn goods, (which is everybody), and foriegn manufacturers(all those "Made in Taiwan, Phillipines, or China guys). But, since we don't print as many dollars as there is a demand for, we run a trade deficit, or accumulate debt. Also, China keeps all made in China goods cheap in the US by restricting the trade of there currency so it is always cheaper than the dollar, which makes foriegn goods more expensive for Chinese consumers, but helps Chinese manufacturers. If the dollars value goes down, then US made goods are cheaper to export, and comparatively cheaper at home in the US. And the trade deficit shrinks. So, by letting the dollar get cheaper, consumers get hurt a little, as do the Chinese manufacturers, while US manufacturers get helped, and every body is better of because of the shrink in the trade deficit.

[Dr Fluff]

The same principles of supply and demand can be said for international trade economics. It's the job of the seller to give at the most proffitable rate that the consumer desires. It's the job of the consumer to receive at the lowest cost per unit that the seller is willing to sell. This creates a tension, and the solution to that tension is based on perceived need. If the consumer perceives that he needs something, then it's in the hands of the seller. If the consumer doesn't have perceived need for something, then it's in the hands of the consumer. Generally, there's a point where the cost is so great the consumer (if he perceives need) realizes that he doesn't really need it. The problem is in international trade-economics, often time the need is so very great that one country rips off another country.

We're buying a tun of useless crap from China and outsourcing to India for cheaper labor. This is great for China and India, because they are taking American money. However, this stinks for us. :toungue:

[James Peter]

It always makes me smile when I hear people talking about a 'strong dollar'. The dollar is pretty weak these days.

Anyway we have a similar situation in the UK, except I suppose more more extreme in some ways because the pound genuinely is strong. What we have left of a manufacturing industry is in pretty lousy shape but in my opinion thats fine, because our economy is still one of the strongest in the world. I'm all for a truely capitalist, global system. Let those countries which can produce cheaply do so whilst those countries who have other talents excel at that. The only thing it is really important to have the capacity to be sufficient in is food - a country should be able to support itself if it needs to but we can still ship in all manner of 'luxury' items.

[Ben Franklin]

The US, by printing fewer dollars, keeps the dollars value high. In doing that, this makes foriegn goods cheaper in the US, because dollars are worth more vs. foreign currencies. So this helps consumers who want foreign goods, (which is everybody), and foreign manufacturers (all those "Made in Taiwan, Phillipines, or China guys). But, since we don't print as many dollars as there is a demand for, we run a trade deficit, or accumulate debt. Also, China keeps all made in China goods cheap in the US by restricting the trade of there currency so it is always cheaper than the dollar, which makes foriegn goods more expensive for Chinese consumers, but helps Chinese manufacturers. If the dollars value goes down, then US made goods are cheaper to export, and comparatively cheaper at home in the US. And the trade deficit shrinks. So, by letting the dollar get cheaper, consumers get hurt a little, as do the Chinese manufacturers, while US manufacturers get helped, and every body is better of because of the shrink in the trade deficit.

??? What if no one is buying U.S. goods with their dollars...? Isn't there a demand for "European" dollars or "Asia" dollars unrelated to America's money policy...? For example, Japan, a country with a floating exchange rate, keeps reserves of U.S. dollars, so that it seems they could sell their notes anytime: wouldn't such sales counter a domestically-tight money supply...? Wouldn't it be more dangerous than inflation if the U.S. national production fell yearly...?

I always heard that money is worthless without goods for sale, so less goods seems worse than less money (which, as I think, can be countered, since the "foreign" dollar supplies number in the trillions)... Also, when American businesses makes sales in foreign countries, aren't those foreign currency transactions, and not dollars...? I think goods production of good should be foremost, and that money is medium for exchanging one's existing goods...