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The natural result of a plummeting dollar. It becomes more expensive to import stuff, less stuff gets imported.
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Yes, dollar adjustments change it, as do changes in the savings rate, which has increased a little.
There's nothing inherently good or bad about the size of the trade deficit, and any action taken directed at the trade deficit itself almost always results in economic detriment.
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I'd say refinery capacity would have more to do with that than a weakening dollar. Gas is more expensive right now then when oil was trading for $15 more a barrel more a year ago when the dollar was stronger.
Posts: 21898 | Registered: Nov 2004
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Yes, refinery capacity explains more of the current price of gasoline.
aspectre: that article was unexpectedly hilarious. They're contemplating opening up the government pork farm reserves . . . a program that buys up substantial numbers of pigs, then keeps them around by the government subsidizing the farmers to stay in the program instead of selling off the pork. And they wonder why there's a pork shortage instead of just higher prices . . .
It is also funny how the article further underlines the far-reaching repercussions from the stupid notion of subsidizing ethanol.
Most of the possible reasons given are good, not bad. It is not like third world countries are static. As they trade, salaries go up. Prices go up. Health care improves. Reduced trade barriers have a far higher correlation with in-country improvement than does foreign aid. This is a good thing Posts: 15770 | Registered: Dec 2001
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The amount of meat being consumed by Chinese people is also increasing. I anticipate higher levels of obesity that will more or less stay consistent with their economic growth.
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quote:Originally posted by fugu13: There's nothing inherently good or bad about the size of the trade deficit, and any action taken directed at the trade deficit itself almost always results in economic detriment.
It always seems to me that when people are getting all worried about the trade deficit, they're trying to support some good ol' fashioned mercantilism. I didn't think that movement was all that popular anymore.
Posts: 1592 | Registered: Jan 2001
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What's funny is economic prosperity tends to be correlated with a trade deficit and not with a trade surplus.
And mercantilism is still remarkably popular, in the 'fair trade' guise. For instance, the people who call for massive trade barriers with China, and the people who demand more subsidies for our farmers (when the current ones are coincidentally impoverishing large parts of Africa and the rest of the third world).
BB: quite possibly, but the population overall will likely be healthier. Move the average nourishment from too little to a good amount and the number overeating will increase.
It is possible to go overboard, but recent research has also found that a large part of the bias towards fattening in American diets is because our subsidies have made that food cheaper.
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