Why do some people have a problem with trade deficits? I confess that I very much do not understand international relations and know very little about this topic. But to me, a trade deficit seems like a good thing?
If one country sells a billion dollars of goods to another country, we call that a trade deficit on one side and a trade surplus on the other. If instead, they both sell a billion dollars of goods to the other, there's no surplus/deficit because those numbers are the same. If I go to the grocery store and buy ten dollars of food, we just call that spending money to buy stuff. I don't expect to have ten dollars of stuff the store wants. In fact, a very useful property of money is that I don't need to care what the store wants, because money is like a universal trade wildcard. But no matter which way around it is, nobody is getting something for nothing. It's just a way of counting up the prices of all those purchases.
However, especially if the buyer is the US, dollars are basically made up — the US doesn't have to do anything to "earn" dollars, they're kinda just IOUs. Of course the US wants everyone to continue valuing & accepting US currency, but that's the only limit. If people in the US spend a billion dollars importing goods from other countries, the US as a whole has gained actual stuff which makes people happy, and has lost an imaginary accounting fiction which it can top up any time. This seems way more like getting something for nothing. Having a trade deficit means that people want your IOUs specifically rather than demanding hard goods in exchange.
What am I missing here? What's the counter-perspective?
Tilde Lowengrimm /
npub1wl…27pm6
2025-04-03 22:46:36
Author Public Key
npub1wlr54jdt4vf5zahxerl7rucexvhx4646ncsd6q4v30x546e3kh8q227pm6Published at
2025-04-03 22:46:36Event JSON
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"content": "Why do some people have a problem with trade deficits? I confess that I very much do not understand international relations and know very little about this topic. But to me, a trade deficit seems like a good thing?\n\nIf one country sells a billion dollars of goods to another country, we call that a trade deficit on one side and a trade surplus on the other. If instead, they both sell a billion dollars of goods to the other, there's no surplus/deficit because those numbers are the same. If I go to the grocery store and buy ten dollars of food, we just call that spending money to buy stuff. I don't expect to have ten dollars of stuff the store wants. In fact, a very useful property of money is that I don't need to care what the store wants, because money is like a universal trade wildcard. But no matter which way around it is, nobody is getting something for nothing. It's just a way of counting up the prices of all those purchases.\n\nHowever, especially if the buyer is the US, dollars are basically made up — the US doesn't have to do anything to \"earn\" dollars, they're kinda just IOUs. Of course the US wants everyone to continue valuing \u0026 accepting US currency, but that's the only limit. If people in the US spend a billion dollars importing goods from other countries, the US as a whole has gained actual stuff which makes people happy, and has lost an imaginary accounting fiction which it can top up any time. This seems way more like getting something for nothing. Having a trade deficit means that people want your IOUs specifically rather than demanding hard goods in exchange.\n\nWhat am I missing here? What's the counter-perspective?",
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