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@ Mike Dilger
2025-03-05 04:36:10
related...
I don't agree with Jeffrey Sachs' Keynesian bail out beliefs. But this quote I think is useful:
"Unfortunately there is a basic point that Donald Trump confuses, I'm sorry to say. He thinks that when the US runs a trade defecit with other countries, that's because other countries are doing something unfair to the US in trade. But the truth is what a trade defecit means is that you're spending more than you are producing, that's all it means. So it would be like you are maxing out on your credit card, buying from all the stores in your city, and then accusing those stores of mistreating you because you're running a trade defecit with those stores. This is the ironic situation right now that yes, the US has a large trade defecit. The reason is that we consume a lot. One of the reasons that we consume a lot is that our government runs an enormous defecit, nearly 7% of our national income. Because we are consuming a lot, it's like we are running down all our credit cards and then we're blaming those that are selling to us as though they are doing something unfair to us. So there's a very basic mistake in analysis right now unfortunately right now that's having huge ramifications for the world, but it's unfortunately it's macroeconomics 101 which I taught for many many years at Harvard and Columbia University and it's just not understood properly in the senior reaches of the US government."
- Jeffrey Sachs on Judge Napolitano's Judging Freedom
https://www.youtube.com/watch?v=6n0iD_xRFjg
IMHO you can run down your credit cards and then devalue the dollar and not have to pay back as much. Or you can declare war and not pay it back at all. Immoral, but strategic. And China is clearly watching for this and positioning to avoid the worst outcomes.