Saturday, March 11, 2017

How did that work for Native Americans?

In the long run trade must balance, in the sense that imports must ultimately be paid for with exports---plus interest. Thus if we buy a billion dollars in laptops from China, we might pay for those goods by exporting $1.5 billion in Boeing jets in the year 2030.But this true fact leads many economists to falsely assume that a country cannot run measured trade deficits forever. In previous posts I like to cite the case of Australia, which sells condos and vacations to Asians in payment for cars and TVs. The Australian government will report a trade deficit year after year, which never seems to go away. But that's misleading. Overall trade in goods, services and assets may be balanced; it's just that those condos are not counted as exports of "goods".
In the long run, Europeans bought all those Indian condos, and the Indians lost there nations.  Why not just say what you mean,  Deficits implement evolution, and that is good.

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