{"id":39786,"date":"2018-10-28T05:53:56","date_gmt":"2018-10-28T10:53:56","guid":{"rendered":"http:\/\/olduvai.ca\/?p=39786"},"modified":"2018-10-28T17:49:54","modified_gmt":"2018-10-28T22:49:54","slug":"why-public-debt-is-a-problem-and-trade-deficits-arent","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=39786","title":{"rendered":"Why Public Debt Is a Problem \u2014 And Trade Deficits Aren’t"},"content":{"rendered":"

Why Public Debt Is a Problem \u2014 And Trade Deficits Aren’t<\/a><\/h3>\n

\"pig2.PNG\"<\/h2>\n
<\/div>\n
\n

As the U.S. trade deficit has been widening for the fourth month running, markets and business experts appear once again bewildered by the events and unsure how to react to them. On the one hand, they had vehemently opposed the increase in trade tariffs<\/a> and the trade war that has made headlines this year. But on the other hand, they now find that U.S. trade deficit reaching its largest level on record \u2014 the precise deficit tariffs purported to narrow \u2014 is very worrying<\/a>. Furthermore, as they scramble to adjust their costs and production plans to the increasing uncertainty of world trade relations \u2014 including here not only U.S.\u2019s trade disputes with China, but also UK\u2019s planned exit from the EU and the fraught relationships<\/a> at the WTO \u2014 global companies are also paying less attention<\/a> to the Fed\u2019s and other central banks\u2019 monetary policies.<\/p>\n

It is not hard to see why they are confused. Political turmoil is bound to make navigation of global markets much more difficult, and smooth planning almost impossible. At the same time, the fallacy that trade deficits are detrimental to a nation in and of themselves is very deeply rooted in public opinion. By comparison, government deficits and easy monetary policies \u2014 the real culprit behind eroding wealth and falling purchasing power \u2014 get a lot less bad press than they deserve.<\/p>\n

It is thus worth reminding ourselves that trade deficits themselves are not at all problematic. As Mises (2009, 448<\/a>) explained:<\/p>\n

While an individual’s balance of payments conveys exhaustive information about his social position, a group’s balance discloses much less. It says nothing about the mutual relations between the members of the group. The greater the group is and the less homogeneous its members are, the more defective is the information vouchsafed by the balance of payments.<\/p><\/blockquote>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Why Public Debt Is a Problem \u2014 And Trade Deficits Aren’t As the U.S. trade deficit has been widening for the fourth month running, markets and business experts appear once again bewildered by the events and unsure how to react to them. On the one hand, they had vehemently opposed the increase in trade tariffs […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[13232,195,7617,3053,805,22627],"class_list":["post-39786","post","type-post","status-publish","format-standard","hentry","category-economics","tag-carmen-elena-dorobat","tag-debt","tag-mises-institute","tag-public-debt","tag-trade","tag-trade-deficits"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/39786","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=39786"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/39786\/revisions"}],"predecessor-version":[{"id":39787,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/39786\/revisions\/39787"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=39786"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=39786"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=39786"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}