"Dustin Williams" <dustinewilliams@gmail.com> wrote:
>> Some actually say that a 100%
>> trade deficit with every other country would be the best possible
>> scenario. This would be like buying goods and services from another
>> country, and they never purchased any of your goods and services,
>> ever. You get all of the goods and services that you need, without
>> having to give your own goods and services in return, all you have
>> given the other countries are little scraps of paper with pictures of
>> dead presidents on them, which are really cheap to produce. If that
>> country never buys any of your goods and services, you never have to
>> send anything of material value outside your border. You've got the
>> benefit of the other country's goods and services, and you get to keep
>> all of your own too!
>>
> One problem with this kind of scenario is that those pieces of paper
> with pictures of dead presidents become worth increasingly less
> against, say pieces of paper with pictures of a queen, and in the end
> lead to high rates of inflation and raises the price of these goods
> that we are importing.
Yep, but as the dollar drops in value, foreign purchasing power
increases which spurs US investment and the purchase of US products by
those foreigners. If left alone, (and that's a BIG if, because
governments can NEVER seem to leave things alone), the market always
corrects and everything equalizes.
> It's a bit more complicated that it was in the days of the gold
> standard, but the principle remains the same, print more money and it
> becomes worth less.
No argument there. Abandoning the gold standard was a really
dumb move.
--
-Jon-
.- Jon Steiger -- jon@dakota-truck.net or jon@jonsteiger.com -.
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