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Debt, Spending, & Keynesian Foolishness
#72
mv Wrote:FYI: We Are Now in the Persistent Depression Predicted by Keynes.

Quote:According to both of us, the trade deficit is causing the economic recovery to stall.

That makes no sense to me. First off, what he is calling a 'trade deficit' is not true. It is just a 'trade imbalance'. Trade deficits are where imports are accepted with a promise to pay at a later time. There is a deficit there, because an equal exchange has not occurred.

His explanation doesn't mean much to me. Sorry.

Dr Walter Williams states in "Trade Deficits: Good or Bad?":

Quote:Professor Don Boudreaux, chairman of George Mason University's Economics Department, wrote "If Trade Surpluses Are So Great, the 1930s Should Have Been a Booming Decade" (www.cafehayek.com). According to data he found at the National Bureau of Economic Research's "Macrohistory Database", it turns out that the U.S. ran a trade surplus in nine of the 10 years of the Great Depression, with 1936 being the lone exception.

During those 10 years, we had a significant trade surplus, with exports totaling $26.05 billion and imports totaling only $21.13 billion. So what do trade surpluses during a depression and trade deficits during an economic boom prove, considering we've had trade deficits for most of our history? Professor Boudreaux says they prove absolutely nothing. Economies are far too complex to draw simplistic causal connections between trade deficits and surpluses and economic welfare and growth.

It is also worth noting that the Great Depression was in fact two depressions, back to back. By 1936 the US had come out of the first one(note the 'so called' trade deficit). However, due to predatory legislation, the economy was once again forced into the second phase of the Great Depression. So,........'so called' trade deficits are not bad for the economy, much less during a depression.
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[No subject] - by Palladin - 03-07-2010, 09:34 AM
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