NEWS: U.S. Trade Deficit Hits Record $665.9B in 2004

People a trade deficit is something to worry about regardless of what the Bush administration is telling about.

US depend on foreign market to buy stocks, and that is no happening because the low on the dollar.

Japan hold 16 percent of the US treasury bonds, and they are not buying as much anymore.

Since 2002 the dollar value has declined, now like some point out, the trade deficit is good for exports, but the problem is that if the decline of the dollar is becoming faster, and foreign investors can make it fall even more if they want too.

Is misleading to said that is going to be fix, and to paint rosy pictures of a “faster growing economy”

Yes is growing because US is selling cheap but if US stop the imports then the markets will turn around other countries will give an ultimatum to the US to fix the deficit or else.

See US is financing its deficit borrowing more and more, and right now 40 percent or more of our debt is owned by central banks in China, Japan, taiwan, and other countries.

Most economist believe that our account deficit is running in dangerous levels.

If foreigners stop buying and push sells interest rates will go higher and it will hurt us the American people.

Then our American economy will take a hit in a way that the bush administration is not telling about, if interest rates go higher, how can people in a already tied budget with so many cuts in our domestic agendas is going to pay higher interest on houses, car and other goods?

Then what? Under bush administration our country is more vulnerable now than ever before, having an massive deficit with not even a plan to fix it, is going to hurt our nation sooner or later.

www.publicdebt.treas.gov...

[edit on 16-3-2005 by marg6043]

When you express it as $665.9B it looks like chickenfeed.

When you express it as $665,900,000,000 it looks more 'impressive' but still beyond the scope of many people's experience.

So... how do you express the worst trade deficit ever in terms that people understand?

Originally posted by MaskedAvatar
So... how do you express the worst trade deficit ever in terms that people understand?

Perhaps if we tell people that communist countries like China have more ownership on our country than the Americans then they will get a wake up call.

Honestly our country is becoming more and more the ownership of other countries than to the American people.

Maybe one they other countries will come over here and claim their ownerships rights and take away our properties and we will have to move some where else.

Pay attention to debt to GNP ratio

Yeah, Marg, okie dokie. No deficit is good, per se', but if I am not mistaken, and please clarify if I am, but this current administration's deficit equates to roughly 2.9-3.0% of the US GNP, whereas, the Reagan deficit was roughly about 4.8-5.0% of the GNP, and the Carter deficit was roughly about 8.5-9.0%. Which do you prefer, and which do you percieve as being the token killer of the economy?

Perhaps this may be of interest, along with the other links I gave previously?
National Debt Thermometer: 26-Feb-05
National Debt burden: Full history
Rethinking the surplus
Why the Debt Burden increased in 2004

And this (linked below), where this is said:

The impending disaster to American markets will not occur for a simple reason. Our behavior is not going to change any time soon. We have a $120 Trillion country with a miniscule $4.5 Trillion external debt (43% of which is owed foreigners) that couldn't be less significant in the scheme of things. On top of that the country's net worth is growing at the rate of $5 Trillion to $10 Trillion every year. Further, we are:

1…….benefiting from lower prices for so many goods (including those for our domestic businesses) it is straining the storage capacity of the average home in America.
2……..avoiding the additional tax burden that tariffs would have imposed on American consumers were it the government's policy to protect American jobs.
3……..helping to industrialize the poor nations of the world by financing them with a free trade policy and buying their goods and services
4……..promoting the democratic form of government through economics; promoting free markets to help emerging nations get on their feet

The Right Scale: Saturday, March 12, 2005

And Section 2: Deferred taxes, the national debt, the unfunded liabilities in Social Security, and the nation's balance sheet might prove an interesting read?
A study done

Remember, national debt calculates public (personal) debt and intra-governmental (government) expenditures and then adds them together. It would appear to me, going by the the charts given, that many Americans simply need to stop using there credit cards, huh? Governmental spending can be cut tremendously by all of us getting together and taking 2x4's and going to Washington and beating Congress and Senate into submission, as well as cutting their lucrative salaries and benefits packages.




seekerof

[edit on 16-3-2005 by Seekerof]

Well...here are some good links:

First..read the following...it's simplified but a very good indication of what happens to wealth when compound interest is allowed in a society (many of you may already know this story):

I want the earth plus 5%

Now here is a recent article (from the same site) that explains visually why trade deficits matter:

Link

Look about 2/3 down the page for explanation about exporting inflation and importing deflation. Our government is bankrupt and is floating inflation to asian countries..who are spending thier population's savings to keep us from collapsing.

Trade deficits matter...a LOT...

News flash, to all the Democratic party mouthpieces-the deficit has been generally increasing for *decades*. And it will go up even faster as soon as President Hillary steps up.

Of course, it will be spun, the numbers crunched, to keep things looking like they've decreased, like the so-called "budget surplus" that was nothing more than fake numbers and shady math.

Government is corrupt, people. Get it through your heads, it's not a Bush problem. As long as you insist on being so narrow visioned, the problem is never solved, and you simply become part of it.

It's called "economic warfare", and as long as we keep playing partisan games instead of playing the game the same as the rest of the world, we're gonna get screwed. Instead of allowing trade tarifffs imposed on us by *every* nation, and imposing *none* in turn, instead of forgiving every single debt to America and then owing those same nations interest on monies we've borrowed.

The computer bits marking the money aside, America mainland has the resources to survive an economic conflict, long enough to destroy any nation stupid enough to take it that far. As long as we keep being pansies, getting stepped on and turning the other cheek, they'll nickle and dime us to death.

Mr. Nice that is a very good story of how our nation is not longer for the people or by the people but to the elite group that owns the banking system and the corporations in the world.

I am waiting for the time in which the interest become higher and people would not be able to spend on our domestic economy, that will be the last drop in the bucket before our nation will star screaming bankruptcy we know that the wealthy people in our country don’t even bank in our country they will never lose a penny.

What a sad outlook.

It's the presentation to the populace of 'invulnerability' coupled with abysmal economic mismanagement and its own self-serving mission that has led the Bush administration to create the economy that resembles a black hole in the first place.

Seekerof, I am glad to have you around to shed some light on the truth.

Listen to Lou Dobbs and get paranoid but only after you buy his book.

I guess Japan, Italy, Canada, France and Germany are going to cave in soon and then the US. Run to the hills, have an indian show you how to skin a deer.

Qwas,

A trade deficit means you DID (past tense) have a strong economy.

who has a stronger economy than the Unites States? The United States still exports more than any other country.

If a Trade Deficit is so good, why are all other countries striving for a Trade Surplus???

Take China, they have to export goods in order to make money because they do not have that big of an internal demand for goods and services. In the US we do. We can still have a trade deficit because we create wealth. If we had to buy everything that consumers and business needs that would create serious inflation and that would be much worse than a trade deficit.

People, America creates wealth. If you invest money in a house at 100,000 and it goes up %10. you have created $10,000 in wealth that you can take out of the house and spend it. If you invest in the stock market and make money you can spend it. If you start a company building houses the profit that you make you can spend it. When you create wealth you can export some of your wealth and still be fine.

The problem we have is that the Government spends too much and we import too much of our energy needs. When China quits pegging its currency to ours we will become more competitive with china and tha tdeficit will go down. I have a feeling that we may be about ready to turn the corner on alternative energies. I was watching Mad Money a little while ago. Cramer was talking about enregy. He said in the past when oil was high alternative energy companies would start up and OPEC would see competition so they would open up the tap and flood the market with oil. This would cause the alternative energy companies to go out of business. OPEC has been saying that they are going to pump more oil but they have not. They can not, they are close to maximum output. This means that alternative energy will most likely finally start to happen in a big way.

You are so wrong in you views, US economy looks strong because US get away with something that other countries don’t.

When US runs out of money it just keep on printing more, is called borrowing and that is what is causing our deficit right now.

Also American is out sourcing so our goods are produced in other countries, that is why they can still be sold to the American people at lower prices.

Example the big conglomerate Wal-Mart, he is inundating our markets with cheap products because it have them made by China while giving Americans low prices is putting our own American owned small business out of business.

"Exorbitant Privilege," or, How Worrisome Is the U.S. Trade Deficit?
1. Back in the 1960s Charles de Gaulle would complain about the "exorbitant privilege" that accrued to the United States by virtue of its role as the key currency in the post-World War II Bretton Woods international monetary system. Other countries had to worry about their balances of payments: they had to constrain demand or go through the distress of a devaluation in order to balance their trade. But the United States did not: it could simply print extra dollars to cover whatever excess of desired imports over desired exports happened to exist.

We had trade deficits in the 80s thanks to Reagan domestic economic mismanagement, then in 1990s and early 2000s due to not enough demand and the unemployment of the countries we sold too.

The only reason US is so successful is because is the leader of the world economy.

The first exorbitant privilege is that foreign central banks prefer to hold their reserves in dollar-denominated assets--and as the world economy expands, they want to hold more and more of such dollar-denominated assets. That finances a component of the trade deficit: after all, if they want to buy dollar-denominated assets, they first need to acquire dollars by convincing us to buy imports.

We are lucky that other countries preferred monetary exchange is the dollar so far.

The second exorbitant privilege is that rich people in many foreign countries think that dollar-denominated assets--large sums of money in the Vanguard funds or somewhere in Citigroup--are an important part of their political risk insurance portfolio.

See most of the wealthy investors of US economy does not even keep their money in our country if something happen to the economy the just move somewhere else.

The third exorbitant privilege is that even if the rich abroad are confident about the political stability and economic prospects of your native land, the United States is still a very, very nice place to live in many, many ways.

Something very important the security and stability of American still makes it very attractive for other countries to invest and profit with America.

But at the first sign of instability in our own soil and they will move to greener pastures.

www.j-bradford-delong.net...

www.j-bradford-delong.net...


[edit on 16-3-2005 by marg6043]

Take over China, BAM!!!, problem solved.

US economy looks strong because US get away with something that other countries don’t.

And what is that?

When US runs out of money it just keep on printing more, is called borrowing and that is what is causing our deficit right now.

So you say that because the Government spends more than it takes in we have a trade deficit?

Example the big conglomerate Wal-Mart, he is inundating our markets with chip products because it have them made by China

Not sure what chip products you are talking about.

then in 1990s and early 2000s due to not enough demand and the unemployment of the countries we sold too.

You are right, are economy is stronger that is why we buy more than anyone else. If it was not stronger we could not buy more. Russia does not buy much because they are mostly dirt poor. If americans were mostly dirt poor we would not have a trade deficit. If our trading partners were mostly richer than us we would not have a trade deficit.

That site, theoptimist123.com you get your info from certainly does paint a bright and shiny picture for world economics but that graph doesn't exactly show the big picture IMO. History has proven that humans are builders rather than destroyers like that site said but we also do compete for money, resources ect. this has not changed. It's really inevitable that the US will find it increasingly difficult to remain in it's position. There is only so many places that money can be made and so many products that can be sold and every countries companies are competing for these sales. Which means as one countries rises others will decline, it's not a sudden process and overall wealth is likely to increase but the hands of that wealth will also have gradual change. America's great wealth really was built up to the economic superpower status from the wars in Europe and Asia. The industries of Americas major competitors for trade were destroyed which left America the only country that could produce many goods. As countries re-built their industries America had to compete with them and thus the amount you could sell was reduced and more products you were buying were made overseas. Although many companies US were well intrenched by then, so the process didn't happen overnight. Now days western Europe and Japan have long recovered from the war and Eastern Europe is starting to recover from the turmoil and bad economic practices there. China and India have also been growing economically like no other time in recent history, this will mean that there is more competition and while this is good for business overall there will also be a gradual shift of wealth.

This is a less optimistic article than those found on theoptimist123.com but it is always good to read many points of view about any situation to improve understanding. There is also a number of graphs below the article that are perhaps more relevant to the trade deficit and the subsequent fall of the dollar. Internal wealth production very much depends on how much the dollar is worth, like you said if a 100 000 house goes up 10% than you have made $10 000. However if the US dollar is now worth less when compared to other countries currencies than you will no longer be able to buy as many goods from other countries with it as before. That $10 000 that used to buy you $20 000 Australian dollars will now only buy you about $12 500, while at the same time my $10 000 from my house which only bought me $5000 USD a few years ago will now buy me about $8000 USD. Thus my relitive wealth and buying power has increased and overall internal wealth counts for more buying power when it comes to imported goods.

The US can scarcely prevail as the global superpower if its economic fundamentals are weak. Britain’s two hundred years of global supremacy were based on a strong currency, a large trade surplus and growing foreign investments. Trade decline in the late nineteenth and early twentieth century gave a clear sign that Britain’s empire was on the wane. Today’s trade and payments deficits, and the falling dollar, may point in the very same direction for the global order based on US dominance.

www.globalpolicy.org...

[edit on 17-3-2005 by Trent]

Originally posted by Trent
That site, theoptimist123.com you get your info from certainly does paint a bright and shiny picture for world economics but that graph doesn't exactly show the big picture IMO. History has proven that humans are builders rather than destroyers like that site said but we also do compete for money, resources ect. this has not changed. The US can scarcely prevail as the global superpower if its economic fundamentals are weak.

You have my vote for that post, you are right, right now our national deficit is making our dollar weak, that in turn affect our trading, we are lucky that the preferred monetary currency is the US dollar.

But if US doesn't fix its problems we will have higher interest that is going to affect the American people, we have also our personal debt to think about.

Most Americans live just like the government on borrowed money to look good and to get what they need.

But higher interest will make Americans stop spending, and how can that help the economy our domestic economy.

We are getting warning signs but nobody cares. While the government keep borrowing money to support two countries in the middle east through the defense budget.

We have profiteers like the Carlyle group making money from the money that we don't have, now who is that money going to benefit? our nation? the defense budget? or the elite few that belong to their group?

I know something is for sure it ain't going to be you or me.

American has become a dipping pot for anybody to profit from it, but nobody cares about our nation, only how much they can make out of it.

We the people are the ones left with the mess and the debt to pay back.

People doesn't know how low our dollar is becoming abroad because they never get out of the country to see it.

But I have a friends that had, and thanks to how the dollar is going down she and others from her country can afford to get more for their money they use the currency fluctuations to make money.