US recession fears are growing

The GND isn't a plan. It's a shopping list.

How exactly are you going to get "zero involuntary underemployment"?

What you have there is the equivalent of something you'd hang on your refrigerator that your 1st grader brought home.

Sure. The "american dream" is alive and well, in China. I remember they said something similar about Venezuela.

I mean China is great if you like total government censorship, being run over by tanks, mind boggling pollution, millions of people in internment camps, a "social credit" score for each citizen, no human rights and a society that is basically ruling class and serfs.

If you like China so much, then move there.

 

We are something like 17 months out from the presidential election, and wouldn't you know it... the propaganda wing of the DNC are pumping out story after cautionary story about the "wild collapse of the economy" and other fanciful tales of woe. Why? Because the good citizens need a good scare. The masters have declared that the economy must tank so we, the voters, are sufficiently scared enough to vote for some crazy communist in the next election cycle. And that's about it.

 

And the way you combat it is using our economy against theirs to get them to drop their tariffs.

Tariffs are why we have a wall in Mexico made out of Mexican military members.

 

It's propaganda in the form of an unworkable manifesto. We have an climate change problem and the Green New Deal is shamefully unserious way of addressing it.

 

You still haven't offered anything backed by solid economics.

As far as my "allegation" goes, the central fallacy of mercantilism is exports good imports bad. It is the belief that any deficit in a trade balance is a monetary loss that governments should use protectionism to address. This was back before it was widely realized that trade creates wealth and that, no, trade deficits are not net losses. Anyone who, like Trump, preaches this nonsense is going back 2.5 centuries, not 2.5 decades.

Almost every time he's talked about trade deficits he has gone with the mercantilist approach of explaining them: as a loss. He has been doing this for at least a couple of decades now. It is probably his most consistent claim about the economy. I'm not sure how anyone who has even somewhat been paying attention to the man could claim to have missed this, but here are a couple of examples.

"You only have to look at our trade deficit to see that we are being taken to the cleaners by our trading partners."

And in perhaps the most economically ignorant statement ever made by a modern President: "Our trade deficit ballooned to $817 billion . . . Think of that. We lost $817 billion a year over the last number of years in trade. In other words, if we didn't trade, we'd save a hell of a lot of money."

I've actually had Trump followers on this forum fall into two camps: those that back up Trump's mercantilism above and those that are so floored by the stupidity of these words that they have to try playing them off as a joke.

 

Sure. Being a trade consumer instead of a producer makes you wealthy. Yeah I don't think so.

Sure, I can back it up with economics.

China massively increased it's GDP by engaging in mercantilism and stealing manufacturing jobs and technology from other countries quite quickly.

If tariffs on the US were higher than the other country before Trump increased tariffs, then we're not the ones engaging in mercantilism.

 

I'm going to just have to start here because it is a repetition of the same mercantilist philosophy that should have died in 1776 but people like you and Trump keep trying to resurrect despite the fact that it is completely unhinged from reality in some easily demonstrable ways. This is literally econ 101, if not pre-econ.

Yes, so long as there isn't some kind of deception going on with one side misrepresenting what they have to offer, trade generally creates wealth for both sides. That's why they trade. I can link to a few dozen different intro econ sources to explain this if you want, but the fact that you trade at all is a tacit acceptance of this fact. Name one wealthy party that ever got wealthy without consuming anything in the process and without that consumption contributing to their wealth.

I'll make it even easier for you. Imagine for a moment that I kept the "status quo" and you decided to stick to your philosophical guns and never "import" anything because you, like Trump, think it represents an economic loss. You can go out and be entirely self-sufficient, not consuming anything that isn't directly the product of your own labor. Which of us will be wealthier? Well, I'll have things like a computer and a car and AC, etc. etc. you'll have . . . whatever you managed to make out of whatever rocks and wood. Do people seriously just not read Wealth of Nations in school anymore . . . because this was pretty much the main point. Tell me again how consuming didn't make me wealthier. Go ahead, revive that 2.5 century old zombie.

 

So you'd like to go back to theory instead of real world examples of China and EU "deception" and having higher tariffs than the US prior to Trump's increases?

People who get rich by expenditure aren't "consuming", they're "investing". I mean you can call purchasing a building and hiring employees and starting a business "consuming" if you want, but it is not the same thing as going to the dollar store to buy Chinese junk.

We certainly don't get rich by closing down steel plants and major industries and then buying those same goods from China. Some FEW will get rich in doing so, at the expense of the entire middle class. It certainly doesn't make the COUNTRY richer.

By the same "self sufficient" argument, I can be wealthier than you by choosing what to consume and what not to consume. It's not as simple as saying "consuming". If you "consume" a new deck on your house by buying the lumber and hiring someone to do it, while I build my own deck, I've maintained more wealth by not consuming.

Your argument is overly simplistic.

Consuming does not magically make one wealthy to the exclusion of everything else.

Being able to consume means you must produce something in order to continue consuming.

When you lose the ability to produce, you can no longer consume.

 

The degree of these tariffs has nothing to do with my last post.

Sophistry will get you nowhere. Everyone consumes. There is a cost to doing business. Please don't pretend you don't understand that.

. . . me along with everyone who actually knows what the word "consuming" means.

Another non-sequitur.

If China produces those same goods for cheaper, then yes, that's exactly how we get richer. Do I really need to explain the concept of opportunity costs and comparative advantage? We can go back 2.5 centuries and do that if you want.

Yes, it does make the country richer. There are more consumers of steel than there are producers. Reducing steel costs benefits more American businesses than it harms.

Once again, 2.5 centuries. Adam Smith. Dude wrote a book about this.

That's called a free market, which is what I'm advocating for against Trump. Choosing what I consume and what not to consume WAS my tactic. You are abandoning Trump's philosophy and joining my side. Good job.

That's only true if you could not have used your time an energy for something more profitable than a deck. I'm sorry if that is the case. I'm a hell of a lot richer paying someone who specializes in building decks to build my deck while I use that time for something that can get me more money. Opportunity costs. Comparative advantage. We are back in our 2.5 century time machine and having to review the basics of capitalism.

Feel free to point out any flaw in it when you find it, but stay away from silly non sequiturs as you do.

Good thing I said trade creates wealth and not "consuming . . . to the exclusion of everything else." You got a collection of these strawmen just saved up somewhere, or are you making them special for me?

Yes. No one ever argued otherwise. Ever. You do understand that a "trade" involves one side exchanging a good or service with another . . . yes?

Good thing the "loss of the ability to produce" is a fake boogeyman that has nothing to do with reality.

Ah, I see, you are back to your old fallacy of assuming that manufacturing is the only form of production (it isn't, of course) while also falsely believing that manufacturing production in the US declining when in fact it is on the rise and is close to reaching record highs. Cool. Got it.

I'm having a hard time getting through one line of this that isn't a straw man. Care to try again? You didn't actually respond to a single thing I said.

 

Their tariffs aren't the reason Trump is pressuring China with increasing tariffs.

 

I have to wonder what Trump supporters have against just going back to the Constitutional way of doing things and letting Congress handles taxes. We'd be better off economically and . . . you know . . . bonus points for Constitutionality.

 

EU tariffs are 1.79% and ours are 1.66%. Do you really think 0.13% makes much difference?

What's the justification for imposing higher tariffs on Canada when their tariffs are 1.52% and we have a goods and services surplus with them?

 

Translation: Please Allah, let the US economy tank! It is our only hope to defeat Donald Trump in 2020.

 

There's several ways of measuring the index.

Did you include banning US beef and the EU having a 5 times higher tariff on US made vehicles?

 

The difficulty is in convincing the general public that the economy is in dire shape without it actually being true.

Democrats need to get everyone to believe there's about to be some huge stock market crash, a housing bubble burst, that tariffs will cause runaway inflation, oil prices will skyrocket, and to convince everyone this is all Trump's fault. So far we've got fairly wonky analysts looking at rather arcane statistical data and finding what they tell us is unquestionable evidence "the mother of all Depressions" is imminent. Meanwhile the general public sees rising average income, very low unemployment, negligible inflation and credit easy to get. Housing prices seem too high, but most of us aren't good analyzing the PMI or trade imbalances, don't know about the costs of debt servicing, trends in derivatives and commodities futures. I saw an article a few days ago digging deep into the Chinese tariffs to conclude there has been no impact yet on consumer prices of Chinese goods (there's a lot of data on this). The general public needs to be convinced things aren't the way they seem.

 

Then I see you understand why Trump's tariffs are having us choose items produced in vietnam.

As I said, your argument of consumption is overly simplistic. If being a vast consumer made you more wealthy than being a producer, China wouldn't have surpassed so many countries GDP.

I mean you can imagine that buying things makes you more wealthy than selling things if you'd like.

Other than your continual, day after day, unfailingly incorrect usage of the term "strawman" you don't have anything else here.

But sure, losing our manufacturing base has made us so much more wealthy.

 

We're charging a 25% tariff on light trucks. How many one-offs do you want to explore? Why not look at the overall tariff rate instead of going with one-offs?

What about Canada? Why is the Orange Oaf going after them? We have a trade surplus with them and they have lower tariffs. Could it be Trump is an unprincipled bully?

BTW, why aren't we stopping illegals from this country sneaking across the border into Canada? I don't think we're making any effort at all.

 

If you (and your 'likers') had read Prof. Wray's article, you would have known your reply is nonsense.

Read the article.

More ignorant comment - literally, you did not read the article. Wray is a Doctor of Economics at the Levy Institute, not a first grader.

China is not Venezuala: the latter suffered a collapse in its external revenue.

[btw, I also see the phenomenon of the '1st world rustbelt' as an export related problem, which arose despite the operation of "comparative advantage" which is supposed to counteract the loss of local manufacturing, but doesn't do that in practice (see Detroit); but if Keynes' 'clearing union' concept had been instituted, a different outcome might have been possible].

You've listed the downside. On the upside China now has a middle class that is bigger than the entire US population, after a mere three decades of rapid growth in China, the starting point being universal poverty in that country.

You mean thirty years ago? Reminds me of the 6 kids murdered by the 'national guard' on US campuses during the Vietnam war: and in the US today (with the highest imprisonment rate in the world):

"You are living in poverty, your neighbourhoods are like war zones, your schools and hospitals are broken, your young men are in prison...'

Guess who said that? Like I said, it's time to get your own house in order.

The jury is still out. However, unless the US lifts its game internally, the dog eat dog capitalism in the US is likely to fail in such a comparison, cf (from the Ellen Brown article):

"And therein lies a major difference between Chinese and American family wealth: In China, the cost of living is significantly lower. The Chinese government subsidizes not only its industries but its families—with educational, medical and transportation subsidies.

Time to look at Prof. Wray's article.

 

Growing recession fears are not supported by consumer confidence indicators which provide an indication of future developments of households’ consumption and saving, based upon answers regarding their expected financial situation, confidence about the general economic situation, unemployment and capability of savings. For the average person, not an economist or market analyst, this indicator reflects their economic situation, if they are making enough money, can make ends meet, experience an increase in discretionary spending, can get things on credit or worry about paying their bills. An indicator above 100 signals a boost in the consumers’ confidence towards the future economic situation in general and their own in particular. Optimism makes the consumer less prone to save, and more inclined to spend money on major purchases. Values below 100 indicate a pessimistic attitude towards future developments in the economy, resulting in a tendency to save more and consume less as they worry about losing a job and not being able to get another.

Since January the OECD consumer confidence index has been rising from 100.4 to 100.59 in May. This index in the OECD fell from 100.91 in March 2018 to which it had risen from 100.18 in July 2016. (https://data.oecd.org/leadind/consumer-confidence-index-cci.htm). In the US:

The Present Situation Index” and “Expectations Index” are refinements of the Consumer Confidence Index.

Most people don’t devote much time to scrutinizing the leading economic indicators and OECD data, their levels of consumer confidence are based on personal outlook. It is not evident recession fears are growing because people in the US continue to spend, they’ve got work and rising wages, their outlook is good. This perspective needs to become much more pessimistic for a Democrat to prevail in the next election.

For this reason, and since analysis of these leading economic indicators and their relative importance is somewhat subjective, one is left wondering whether dire predictions of imminent recession (and often of much worse) is really just "wishful" thinking of people hopeful Trump will be ousted, rather than intelligent analysis of important factors affecting the economy.

 

Trump's going to tax you into saving your money instead of borrowing to buy stuff.
Great plan.
We borrow and spend.
China saves and invests.

 

You mean chlorine chickens?
Compare tariffs on trucks.

 

I was surprised to see this post in the same thread with China trade.
Check out their debt and savings rate.
Their people save and invest. We borrow and spend.

 

I've never heard of a beef chicken. You grow that in the UK or what?

 

You mean the part where the overall EU tariffs are higher?

To get to the USMCA deal, which has been negotiated to acceptance by Mexico and Canada.

I'm surprised Democrats haven't put a wall on the northern border to keep them in the US, quite frankly.

 

They're kind of like jackalopes.