Punish (or help) the french - boycott them!

[miko2d]

US Trade with France : 2002
EXPORTS $19.018 Billions, IMPORTS $28.408, Billions BALANCE $-9.389 Billions

 US Trade with France : 2003 (January, February, March_
EXPORTS $4.406 Billions, IMPORTS $6.921 Billions, BALANCE $-2.514 Billions

 That is well on the way to $10 billions this year which is about average for our trade deficit with them.

 France total trade surplus: $17.7 billion in 1999.

 French have total trade surplus of about $20 billions a year with the World of which about $10 billions a year come from USA, so there is no way that they use dollars they receive from us to pay for stuff they buy from other countries.

 Since french exporters cannot pay their workers/suppliers/taxes in $$, they must sell those $$ for Francs/Euros. Since there are no importers willing to buy the surplus $$ from the exporters at the current rates in order to buy products from US, how come the dollar does not fall compared to Franc/Euro so that their prducts become more expencive for us and ours cheaper for them and trade balances out?
 Simple. The french government is taxing the french directly or through inflation, uses the Francs/Euros collected from french to buy those surplus 10 billion  dollars and then takes those dollars out of circulation by storing them in their vaults.
 Basically, they subcidise our consumption through taxing the french people. Their export workers really sell stuff to their taxpayers which then send it to us gratis. Consider it a welfare or brotherly gift or a tribute.

 There are several reasons they do such a stupid thing - making their people work for us. One such reason may be political pressure to support the dollar and keep the rate of Franc/Euro down.
 Another may be that they believe the stupid economic theory that the state benefits from exports and is damaged by imports - the theory that is spread in large part by our court economists.

 Whether by design or coincidence, it is very lucky for us that the world believes such crap and maintains positive trade balance with US (France $10 bil., Japan $100 bil., total $500 bil.) while we enjoy increased level of consumption due to $500 billion worth of surplus products we receive in exhange for dull paper they must take out of circulation every year (if they do not take it out of circulatuion but try to spend it on something, the dollar would fall and the whole scheme would collapse).

 Wouldn't it be great if we could persuade our neighbour that working for us few hours a day for free - or for tokens he must never redeem - benefits his family welfare? Alas, people individually are not as stupid as people in mass ruled by the government.

 Anyway, if we put a stop to such wealth transfer by refusing to buy $10 billion a year worth of french products, they will be able to tax their population $10 billion a year less (in their currency), free some people from export industries working for us and use them to produce stuff that french people actually want and can buy with extra money saved from taxes.

 Well, if they want to keep the status quo, they can always continue doing what they are doing except instead of shipping the products to US in exhange for paper to store in their vaults, they can drop them into the ocean/landfill and stuff their vaults with cut newspapers or something.


 I'll take liberty to forsee and answer some frequently asked questions.

Q: Miko, If you hate america so much, why do you live here?

A: What I posted above has nothing to do with love or hate but with the hard cold numbers of trade balances and wealth transfer.
 In any case, why would I want to move from a place that receives $500 billion a year tribute into the world that pays that tribute?


Q: Miko, as long as you are staying here, why do you object to such a great state of affairs where a France is giving us $10 bil. a year of free stuff and the world $500 bil., and we can still denigrade them instead of feeling gratefull?

A: Since a business that has to actually make a product by investing resources into capital, labor, production, etc. cannot compete with a company that prints paper and uses it to import the same product, our manufacturing is being destroyed because of the strong dollar and persistent, artificially maintained negative trade balance (tribute). We are losing what still remains from our manufacturing to imports paid for by paper that our government prints. We lose production facilities and associated expertise, becoming even more dependant on the imports. We are digging into our human and intellectual capital which is not as easy to restore as mere machinery.

 If those countries ever stop accepting that paper as world curency, or worse, try to buy something with ~$35 trillion the world has on its hands, not only will we lose a quarter to half of goods we are using every year and suffer enormous inflation, it could be quite a while before we can rebuild those lost manufacturing industries and become self-sufficient again.

 miko

[blue1]

Miko, I'm not surprised I'm the first reply. I've read it several times and can't quite figure out just what you're on about.

It looks like junk economics to me.

Anyway, with reference to the dollar. Actually the value of the dollar which you mentioned in fact is plummeting at the moment. Heading for 1.20 to the Euro( The Franc no longer exists by the way).  It was the other way around last year.This in fact is in large part due to lack of confidence in the American economy by foreign investors who are selling dollars and gilts.  More to the point there is no confidence in GWB's handling of the economy.

How does that fit in with your theories?

[boxboy28]

Let them eat cake!

[straffo]

Originally posted by boxboy28
Let them eat cake!

hehe
 at least one was not sleeping during history lessons ...

[miko2d]

blue1: It looks like junk economics to me.

 If you consider Adam Smith and his development by classical economists and austrian school as "junk economics", than that's what it is.

Actually the value of the dollar which you mentioned in fact is plummeting at the moment.

 I could say that it is not plummeting nearly as much as required to eliminate our trade imbalance, but it would be irrelevant to this conversation because we are not talking economics here but politics. As the value of the rouble had nothing to do with economics in USSr, so is the dollar's value.

 The support of the dollar contrary to economic reality and interests is done due to political considerations and by political means - foreign countries taxing their people and inflating their currencies in order to subcidise our consumption of their products and to "keep up employment".
 If they decide to continue doing so, they will just buy - and take out of circulation - however many dollars it takes to keep us "buying" their stuff. That's what exporting inflation means and that is what happened most recently in  the 70s.
 If dollar drops 10 times, they will keep buying $5 trillion a year instead of $500 billion a year of our paper. 100 times - $50 trillon. They are getting paper to take out of circulation, so what kind of pictures is painted on it is hardly relevant.
 If they decide to stop that political process of dollar support, the dollar will drop to whatever level that ensures it buys what we have to sell. I cannot even make a guess how many zeroes will be in that inflation number.

 The only economics in that political issue is the destruction of real american manufacturing and subsequent deterioration of other parts of american society - do you think we could continue paying all that welfare, hiring by for Affirmative Action instead of ability, paying union wages and churning out mostly illiterate high school graduates if we actually had to work for living and compete with foreigners economically?
 Even with crappy workforce we still have competitive advantage over them in some areas - because our taxes are so much lower that their. And that is exactly because they are taxed to subcidise us. Give them a tax break of $500 billion a year and extract extra $500 billion a year from our economy and see how competitive we really are or how long can we keep up our egalitarian socialist practices.


This in fact is in large part due to lack of confidence in the American economy

 Whatever dollar is backed with, it's not confidence in our economy. Nobody can expect that they can buy stuff equvalent to current value of $35 trillion if they actually show up with that $35 trillion at our doorstep - because we have nothing to sell them for $500 billion a year that they would consider worth buying.

 Does anyone really expect that we would ever pay off $5 trillion of external debt and provide goods worth $30 + $5 trillion? Or does it sound more likely that we would allow infalation to turn that amount into nothing and keep inflating/borrowing while they let us?

 Here a far from complete list of items that US dollar is backed up with out there:

1. The invalid keynesian theories insisting that trade surplus and inflation are good for the country.

 2. The special interest groups of the export industries/workers lobby - causing their politicians support them at the expense of other workers, consumers and loss of jobs in other sectors.

 3. The corrupt politician who would not admit they are steering their countries the wrong way - as long as the crash occurres after they've left office.

 4. The example we made of the last guy who flatly refused to accept dollars in favor of Euro. So you could say the dollar is backed by the might of the US military.

 5. The US control (recently aquired) of most of world oil reserves - which replaced the defunct Soviet Threat, Indistrial Might and Technological Superiority.

 miko

[Fishu]

Only those who wishes depression, starts boycotting stuff over silly matters.