It's so sad that someone like Warren Buffet does not understand trade theory. But then again I'm not surprised...after all he's a stock picker, not an economist nor a leader of a Fortune 500 company.
Trade imbalance is not necessarily bad for the US. Every time we import something and export dollars, that is essentially acceptance by the counterparty that they will either 1) invest in the US with the dollars we just shipped over there or 2) purchase US goods with the dollars we sent them. There are only 2 ways to use US dollars, invest in the US or buy US good! If the chinese are so cheap that they are hoarding US currency under their mattress with low yielding US bonds, hey all the better for us. But if US investments are no longer beneficial to them they have to buy US goods or services.
If I make furniture and I "sell" it to you for an IOU, and you make t-shirts, at some time I have to buy t-shirts with you. Sure, I may trade that IOU to someone on the way, but that IOU has to be redeemed to the t-shirt maker. If the IOU never gets used, that means the t-shirt maker got the furniture for free.
China is the furniture maker and the US is the t-shirt maker. If China ends up never consuming US goods with it, they we just sent them pieces of paper for all their stuff. Sounds like a pretty good deal to me.
And the analogy of spending on a credit card is not a very good one. The US lasts longer than people and the economy can grow to perpetuity (along with the debt).
Trade imbalance is not necessarily bad for the US. Every time we import something and export dollars, that is essentially acceptance by the counterparty that they will either 1) invest in the US with the dollars we just shipped over there or 2) purchase US goods with the dollars we sent them. There are only 2 ways to use US dollars, invest in the US or buy US good! If the chinese are so cheap that they are hoarding US currency under their mattress with low yielding US bonds, hey all the better for us. But if US investments are no longer beneficial to them they have to buy US goods or services.
If I make furniture and I "sell" it to you for an IOU, and you make t-shirts, at some time I have to buy t-shirts with you. Sure, I may trade that IOU to someone on the way, but that IOU has to be redeemed to the t-shirt maker. If the IOU never gets used, that means the t-shirt maker got the furniture for free.
China is the furniture maker and the US is the t-shirt maker. If China ends up never consuming US goods with it, they we just sent them pieces of paper for all their stuff. Sounds like a pretty good deal to me.
And the analogy of spending on a credit card is not a very good one. The US lasts longer than people and the economy can grow to perpetuity (along with the debt).
Thump553
Lifer
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I'd being interested in seeing this movie someday-I greatly admire Warren Buffet as one of the very few authentic oracles on economic issues, and David Walker was one of the very few shining points of this Bush administration (except that he was totally ignored and marginalized both within and outside the Administration).
But I call shens on this David Peterson supposedly putting a billion dollars behind this movie-according to this chart the most expensive movie ever to produce cost $200M. If Peterson's claims are to be believed he spent as much money on this money as the top seven most expensive movies of all time.
It better have some awesome special effects.
But I call shens on this David Peterson supposedly putting a billion dollars behind this movie-according to this chart the most expensive movie ever to produce cost $200M. If Peterson's claims are to be believed he spent as much money on this money as the top seven most expensive movies of all time.
It better have some awesome special effects.
it's not like your initial response had any real merit or contribution to the thread or discussion. so obviously from your perspective i would expect no response. apparently you think everyone that is uninterested in seeing the movie but opened this thread should also post a no thanks message, wouldn't that be useful.
when china expects their purchasing power to increase with these bonds, yet in reality it has decreased, how much longer will they keep buying them? and what does the US do if they stop?
i am not sure about future theater dates. it will be available elsewhere some time, i think they are waiting to see what happens in the theater first. it will be available on dvd and likely before the election.
agora financial made it, he bought it from them recently. it probably didn't even cost 1 million. the billion was what he started his foundation with. it hired david walker and is trying to increase public awareness of these deficits.
Right, because I will take your word over Buffett's. I am sorry you feel sad for him, but I am sure he doesn't feel sad for you, he would just flat out ignore you.
Keep believing that debt and deficit spending has no impact.
here's a writeup that was on the front page of the business section of the washington post - http://www.washingtonpost.com/...?referrer=emailarticle
It's their own fault for artificially keeping their currency cheap. Bottom line is they hold a huge US currency reserve and when they realize they can't just keep buying bonds with it they have to buy US goods and services, which in turn will increase US GDP.
Just think about how trade works. If no currency were involved the US would trade US produced goods with Chinese produced goods. Instead, China is accepting IOUs, aka US dollars, which is a promise to redeem US goods at a future date for the denominated amount. China MUST redeem US dollars in the future for US investments or goods/services. There are no alternatives.
What is wrong with China buying US assets? What is Chinese USD reserve? like $1.3 trillion? What is the USD money supply? $11+ trillion? Total stock market value? $20+ trillion? Total residential real estate value? $15 trillion?
China is a far way from buying our assets "out from under" us. And it's called equilibrium. When the Chinese middle class grows they will demand more US goods and services and the trade will balance in our favor in the future.
I don't pretend to know everything about international trade but I know enough to know internet armchair economists like you don't know ANYTHING about it.
but the IOUs are worth less than the goods the chinese gave us. and with their currency they are importing our inflation and exporting deflation to us. some guy in china is sacrificing so this place can keep churning. why continue to do so? why continue to finance our debt? when they stop how will we keep going? what about all those dollars - what would happen if they sent them all over here right now?? the fact is we don't want them to do that, we want them to keep sacrificing for us, and giving us goods while we give them useless paper. we hope they stick it in a vault never to see the light of day again. it has been going on but it will not be going on forever.
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