725,8 billion trade deficit...!?

[Swoop]

Originally posted by john9001
you need to understand world trade.
 

So do you mate.  Trade being the operative word.

If it comes to the stage where the US isn't paying for said goods and services then what is the supplier supposed to do?  Continue supply and hope?  Or panic and pull the plug?

Is it better to produce and supply something for nothing in return until you cant afford to pay for the production anymore or is it better to stop production until a market can be found?  What do you think Mr Lee from Hong Kong thinks?

If the US went bust......so would a lotta other people.  But other people are used to being in the ****.  You aint.

[Hangtime]

Originally posted by DREDIOCK
yea it'll hurt at first.
But pain, when inflicted correctly can be a good and positive thing

... I got an errrie mental picture of abramoff, with a shocked look on his face his first night in cell block 9; listening to this speach from from Tom Delay; who's bent over beside him...

[Nashwan]

50% of chinas exports go to the US, if they don't send them to us , who would buy them ? europe?

you need to understand world trade.

if the US is "cut off" who would buy all the oil, nikes, toyotas, shirts, pants,TV's,DVD's,computers, etc.

What does the US buy them with, at the moment? Dollars. What happens to the dollars? They pile up in foreign banks, who can't exchange them all for goods or services, because the US isn't producing enough goods and services.

In other words, in exchange for the goods America is importing, the countries that are making them are getting promises to pay in future. They aren't actually getting paid for the excess American imports now, if they no longer sent the imports, they wouldn't be getting paid, but they wouldn't be working and incurring costs, either.

[Rolex]

Technically, foreign reserves have purposes other than simple liquid currency with the nation of issue.

This is not directed at you, Nashwan, but currencies are not way out of balance now and all this handwringing is not going on in the halls and offices of central banks. All the handwringing and angst is on the internet by financial amateurs and professional handwringers.

[Thrawn]

Originally posted by john9001
50% of chinas exports go to the US, if they don't send them to us , who would buy them ? europe?  

you need to understand world trade.

Irony at it's finest.

[Thrawn]

Originally posted by Rolex
but currencies are not way out of balance now and all this handwringing is not going

Of course they are.  The Fed issues 50 billion USD a week, do you see a proportional fall in USD value?  No.

on in the halls and offices of central banks. All the handwringing and angst is on the internet by financial amateurs and professional handwringers.

Then why are so many central banks either thinking about or already deversifying from a more or less strickly USD reserve?

[john9001]

Originally posted by Nashwan
What does the US buy them with, at the moment? Dollars. What happens to the dollars? They pile up in foreign banks, who can't exchange them all for goods or services, because the US isn't producing enough goods and services.
 

they buy US treasury notes of course, what else are you going to do with "worthless US paper money"

and because they own so much US debt, they cannot let the US default.

[Thrawn]

Originally posted by john9001
and because they own so much US debt, they cannot let the US default.

Sure they can.  Heck several countries are already selling off US dollar denominated assets.

[john9001]

Originally posted by Thrawn
Sure they can.  Heck several countries are already selling off US dollar denominated assets.

selling them to who? you can't sell anything without a buyer.

[Thrawn]

Originally posted by john9001
selling them to who? you can't sell anything without a buyer.

So reduce the price you're selling them at.  Oh wait, that would lead to a devaluation of other US dollar denominated assets.  See where I'm going with this?

[Holden McGroin]

And yet the Dollar has gained significantly on the Yen and Euro over the past 12 months.

Go figure.

[Rolex]

Originally posted by Thrawn

Then why are so many central banks either thinking about or already deversifying [sic] from a more or less strickly [sic] USD reserve?

Because it allows some measure of flexibility in exchange rate fluctuations, brings an investment incentive to foreign relationships, diversifies risk in any financial instrument investments made with the currency, UD$ are still the predominate currency for oil/gas purchases and the global economy is always in expansion, in addition to being a simple investment.

Every person here has a trade deficit. How much do you sell to your local grocery store?

[Thrawn]

Originally posted by Holden McGroin
And yet the Dollar has gained significantly on the Yen and Euro over the past 12 months.

Go figure.

I figure that although the USD has gained on the Euro in the past 12 months, the increase is nowhere near proportional to fall verse the Euro over the past five years.  And I figure that it will gain verse the Yen as long as the Japanese decide they want to prop up the US government by buying US treasury notes.

Originally posted by Rolex
Because it allows some measure of flexibility in exchange rate fluctuations, brings an investment incentive to foreign relationships, diversifies risk in any financial instrument investments made with the currency,

Passing strange that relatively recently central banks have felt a need to protect against risks of having only USDs as their reserve currency for decades.

Every person here has a trade deficit. How much do you sell to your local grocery store?

Specious.  If looking at one to one exchanges sure, but you are ignoring where everyone (at least those not one welfare) get their purchasing power to buy stuff from thier local grocery stores.

- Produce something for your employer.
- Get paid.
- Spend some on groceries.

You're claim would only be true if everyone was paying thier groceries with IOUs.

[Fishu]

Originally posted by Holden McGroin
And yet the Dollar has gained significantly on the Yen and Euro over the past 12 months.

some 8 euro cents. Is that significant? Back then it was somewhat high and the average has been around 1 € - 1.20 $

[Rolex]

"You're [sic] claim would only be true if everyone was paying thier [sic] groceries with IOUs."

They are. They're called promissary notes.