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Supposn
Excerpted from Wikipediaís ďBalance of TradeĒ article:

ďTrade balances effects upon their nation's GDPs.
Exports directly contribute and imports directly reduce their nation's balance of trade (i.e. net exports). A trade surplus is positive net balance of trade, and a trade deficit is a negative net balance of trade. Due to balance of trade being explicitly added to the calculation of their nation's gross domestic product using the expenditure method of calculating gross domestic production (i.e. GDP), trade surpluses are contributions and trade deficits are "drags" upon their nation's GDPĒ. Ö
Ö Refer to:
ďhttp://www.investopedia.com/terms/e/expenditure-method.asp
http://www.bea.gov/methodologies/index.htm#national_meth
http://www.britannica.com/topic/gross-domestic-productĒ.

Is there any net economic benefit to a nationís chronic annual trade deficits of goods?

If a nation experienced an annual negative balance of global trade, (i.e. a trade deficit), that nationís GDP was less than otherwise. A lesser GDP reflects upon, and is reflected upon by the nationís lesser numbers of jobs during that same year. Iím unaware of any nation that enjoyed full employment while experiencing an annual trade deficit.

Respectfully, Supposn
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Gray Seal
The United States has been able to ship created money and received goods in return for a long time. That is what the trade deficit has been. It has been a good deal.

Full employment. One of those terms which is loosely defined. You can change the meaning to fit what you want it to say.

Practical full employment has happened in my lifetime. Trade deficits have been a constant my lifetime. Therefore, full employment has occurred at the same time as trade deficit.

GDP is a stat, but not a stat that defines economic conditions.
Supposn
QUOTE(Gray Seal @ Feb 13 2017, 02:04 PM) *
... GDP is a stat, but not a stat that defines economic conditions.


Grey Seal, I composed this response on February 14, but I wanted to discuss it further with my son before posing it. Iím an economics maven with regard to consequences of our nationís global trade poliies. My sons are more knowledgeable regarding financle accounting matters and the managing of the U.S. dollar's value.
Iím still waiting for him to address my E-mailed questions. Of course weíve discussed other family matters but heís yet to address my questions with regard to our GDP and what may be due to or effected by U.S. Treasury Departmentís or the Federal Reserve Boardís determinations. Itís always ďPopís, later will talk about itĒ.

Annual GDP per capita adjusted to the U.S. dollarís purchasing power somewhat indicate what our nation has done that year and can be compared to other years. If you have a superior indicator, please share it with all of us.

The median wage adjusted for the U.S. dollarís purchasing power is the best indicator we may have of how our middle income earners were doing.
Graphing the two statistics over the years would be very informative.

Respectfully, Supposn



QUOTE(Gray Seal @ Feb 13 2017, 02:04 PM) *
The United States has been able to ship created money and received goods in return for a long time. That is what the trade deficit has been. It has been a good deal.


No!! USAís annual trade deficits are not a good deal.
A trade deficit CERTAINLY reduces its nationís GDP. The actual detriment to the GDP is exceeded by the value of all indirect goods and services that were not reflected by the prices of USAís globally traded products that are the basis for the calculation of our balance of trade.

Nationsí entire production of goods and service products contribute to their GDPs.
But individual product prices do not reflect any production supporting goods or services that were not paid, or entirely paid for by the producers which directly contributed to the production of the final products sold. To those extents, trade surplus nationsí GDPs were increased, and a trade deficit nationsí GDPs were reduced by amounts greater than the amounts indicated by their nationsí net balances of trade.

Respectfully, Supposn

QUOTE(Gray Seal @ Feb 13 2017, 02:04 PM) *
... Full employment. One of those terms which is loosely defined. You can change the meaning to fit what you want it to say.

Practical full employment has happened in my lifetime. Trade deficits have been a constant my lifetime. Therefore, full employment has occurred at the same time as trade deficit.

...


Grey Seal, youíre confirming what Iíve stated. Iím unaware of any nation that enjoyed full employment while experiencing an annual trade deficit.

Within my lifetime, USA has had full employment when a great portion of our nationís products were being shipped beyond our borders; the USA was at war!!
When we are at war and are experiencing full employment, weíre also experiencing extremely great expenditures of blood and wealth that are not justified by our increased GDP.
Despite full employment, President Johnson was unable to fully pursue our ďwar on povertyĒ while we were engaged in the Vietnam war.

Respectfully, Supposn
Gray Seal
I agree with with your statement that GDP somewhat indicates what our nation has done that year. Emphasis on somewhat. The numerical definition of GDP is changed periodically to fit the political needs of the current administration.

A superior indicator of how the United States is doing is to look at the Freedom Index put out by the Heritage Foundation. Economic conditions and freedom go hand in hand.

As to trade deficits: Let's suppose you and I have a trade. I will give you clothes and you will give me pieces of paper where you have put dollar signs on the paper. GDP wise I will make out like a bandit. Who gets the better deal? I would say you.

The United States is in constant war. Has that been good for employment?
Supposn
QUOTE(Gray Seal @ Feb 20 2017, 04:37 PM) *
I agree with with your statement that GDP somewhat indicates what our nation has done that year. Emphasis on somewhat. The numerical definition of GDP is changed periodically to fit the political needs of the current administration.

A superior indicator of how the United States is doing is to look at the Freedom Index put out by the Heritage Foundation. Economic conditions and freedom go hand in hand.


Grey Seal, please further explain your second sentence, ‚ÄúThe numerical definition of GDP is changed periodically to fit the political needs of the current administration‚ÄĚ.

//////////////////////////////////////////////////////////////////////////////
Regarding the ‚ÄúFreedom Index‚ÄĚ published by the Heritage Foundation:
Excerpted from http://www.heritage.org/index/about
How do you measure economic freedom?
We measure economic freedom based on 12 quantitative and qualitative factors, grouped into four broad categories, or pillars, of economic freedom:
1. Rule of Law (property rights, government integrity, judicial effectiveness)
2. Government Size (government spending, tax burden, fiscal health)
3. Regulatory Efficiency (business freedom, labor freedom, monetary freedom)
4. Open Markets (trade freedom, investment freedom, financial freedom)
Each of the ten economic freedoms within these categories is graded on a scale of 0 to 100. A countryís overall score is derived by averaging these ten economic freedoms, with equal weight being given to each. More information on the grading and methodology can be found in the appendix.
/////////////////////////////////////////////////////////

Grey Seal, this is an index based upon the opinions regarding nationís populationsí and their organizationsí extents of liberty to make their own determinations.
I do not presume that my appreciation for liberty is any less than that of the Heritage Foundationsí leaders, but I have reason to believe that because my analysis and conclusions regarding economics and other political matters differ from the Heritage foundationís, they and most other proponents of the foundation believe my appreciation of liberty is less than theirs. I of course disagree and believe that itís their analysis and conclusions that are faulty.

I consider their ‚ÄúFreedom Index‚ÄĚ to be an attempt to quantify extent of liberty and applying the concluded subjective opinions to compare national governments policies and the consequences of those policies as they apply to the nationsí populations and their commercial enterprises.

The extents of liberty and the extent of well-being are both significantly subjective political questions. I believe thereís no economic freedom if governments hinder their peopleís ability to sustain themselves and financially flourish; that does effectively hinder or deny freedom to their population. The Heritage foundation itself acknowledges that their Freedom indexís primarily consideration is freedom rather than economic well-being. But regardless of the Freedom indexís validity, or lack of validity, itís a subjective index regarding freedom and possibly primarily economic freedom.
The index's primary concern is not a populations well-being due to the economy. I do not consider the Freedom Index as an economic indicator.
Respectfully, Supposn



QUOTE(Gray Seal @ Feb 20 2017, 04:37 PM) *
... As to trade deficits: Let's suppose you and I have a trade. I will give you clothes and you will give me pieces of paper where you have put dollar signs on the paper. GDP wise I will make out like a bandit. Who gets the better deal? I would say you.


Grey Seal, No!! USAís annual trade deficits are not a good deal.
A trade deficit CERTAINLY reduces its nationís GDP. The actual detriment to the GDP is exceeded by the value of all indirect goods and services that were not reflected by the prices of USAís globally traded products that are the basis for the calculation of our balance of trade.

Nationsí entire production of goods and service products contribute to their GDPs.
But individual product prices do not reflect any production supporting goods or services that were not paid, or entirely paid for by the producers which directly contributed to the production of the final products sold. To those extents, trade surplus nationsí GDPs were increased, and a trade deficit nationsí GDPs were reduced by amounts greater than the amounts indicated by their nationsí net balances of trade.

A nationís that increases their production of goods and services has enabled more workers to be employed for more hours. USAís GDP and numbers of jobs both reflect upon and are reflected upon each other. This additionally stimulates wage rates of greater purchasing powers.

Regardless of how many or how few people are directly required to produce a product, the producing enterprises require some service enterprises or they directly employ labor to maintain and repair their production facilities, (which in turn have somewhat similar needs). Producers generally require parts and/or components and/or materials, which are often sourced from within the nation of the final product's producer.
There's a symbiotic relationship between production and technical knowledge. As we produce we gain experience and insight as to what weíre doing and how weíre doing it. We learn about the tools and materials weíre manipulating.

I recall a paragraph within one of Newt Gingrichís books; he wrote of cargo ships unloading high-value manufactured goods from Asia and returning with Their Shipping containers full of tightly packed rags, cardboard, and scrap metal. We'íre continuing to transform ourselves to eventually be only the consumers of goods from the industrial nations. The producing nations earn the benefits of production.

Respectfully, Supposn

QUOTE(Gray Seal @ Feb 20 2017, 04:37 PM) *
The United States is in constant war. Has that been good for employment?


Gray Seal, apparently not like it was. Despite our sacrifices of resources, (we dedicate our wealth, risk and lose whole and parts of peoples and the time to do something more useful). Our populationís not generally richer, or happier, or more knowledgeable. If a war can't even provide full employment, why bother with it? I suppose war ainít such a good deal for our economy or society. Politicians are beginning to learn it doesnít even work that well for them. War timeís ainít as good as they usetobe.

Respectfully, Supposn
Gray Seal
QUOTE(Gray Seal)
The numerical definition of GDP is changed periodically to fit the political needs of the current administration.

'Changed periodically' means that the formula to define GDP is altered. Why is it changed? Because certain changes will present a more favorable impression to voters. Those are the voters who put too much stock in GDP. If you want a more impressive GDP change the formula to get that higher GDP.

-------

Liberty or freedom is the direct opposite of power of the state. That is the context of what freedom is with the freedom index. If you have a preference of state power then that is not an equal appreciation of liberty.

There is a causal relationship between freedom and economic condition. This relationship is a better means of examination of an economy than GDP. You may study the freedom index report. You will see that countries which are expanding freedom also have economic improvement. Those countries where the score is dropping also suffer decreased economic conditions.

-------

You do not see that receiving goods is better than receiving money which someone creates? If not, I wish to do business with you. What do you have to sell? I will prepare the appropriate paper with dollars signs.

-------

The Next Gingrich story is further evidence that Gingrich is an idiot. He has been a successful politician with his ability to use crap economics to fool people who do not know any better.
Supposn
QUOTE(Gray Seal @ Feb 21 2017, 11:40 AM) *
The numerical definition of GDP is changed periodically to fit the political needs of the current administration.
'Changed periodically' means that the formula to define GDP is altered. Why is it changed? Because certain changes will present a more favorable impression to voters. Those are the voters who put too much stock in GDP. If you want a more impressive GDP change the formula to get that higher GDP.
...


Grey Seal, a first GDP line graphed based on U.S. dollars adjusted to retain constant dollar purchasing power is an example of a graph where the criteria for changing the calculation of GDP is accounted for.
The statisticians clearly indicate they changed the criteria for describing the U.S. dollars within their GDP graph. Their change's not describing actual dollar amounts, but amounts based upon the dollarís variable value at various moments of time. Theyíve revealed the essence of a comparative truth over a duration of time.

If we overlay that same graph with a second GDP line graphed based on the actual unadjusted amounts of U.S. dollars at each point within the line, weíve graphed actual amounts but have in effect concealed a comparative truth. Weíre familiar with this concept.

Youíre suggesting or contending over the duration of time represented by GDP graphs, USAís administrations for its own purposes, secretly change the criteria of calculating USAís GDP and thus concealing the essence of truth?
Thatís more than conceivable, itís certainly feasible. Now whatís the logical basis of your accusation?

Respectfully, Supposn

QUOTE(Gray Seal @ Feb 21 2017, 11:40 AM) *
...Liberty or freedom is the direct opposite of power of the state. That is the context of what freedom is with the freedom index. If you have a preference of state power then that is not an equal appreciation of liberty.

There is a causal relationship between freedom and economic condition. This relationship is a better means of examination of an economy than GDP. You may study the freedom index report. You will see that countries which are expanding freedom also have economic improvement. Those countries where the score is dropping also suffer decreased economic conditions. ...


Grey Seal, you and I share the opinion that a nationís population free to independently think and (without harming others) act, are more likely to enjoy better economic and social conditions (than otherwise).
[Freedom is not the only criteria that promotes an economy to flourish. The intelligence and good judgement and strivings of a nationís citizens, voters, officials, all help. The benefits or detriments of circumstances, (i.e. luck) are often factors effecting most endeavors. Efforts and perseverance seem to be better receptors of good luck.]

GDP calculations do not take freedom into account. The Heritage Foundationís description of their Freedom Index state their evaluations of a nationís extent of freedom is the major determination of the nationís index number.
If the rank or proportional differences between nationsí GDPs and their Freedom indexes greatly differ, then obviously the two number systems are poor predictors of each other.

If this is all true, itís logical to conclude a Freedom Index number is a poorer indicator of a nationís economic condition.

Respectfully, Supposn

QUOTE(Gray Seal @ Feb 21 2017, 11:40 AM) *
...You do not see that receiving goods is better than receiving money which someone creates? If not, I wish to do business with you. What do you have to sell? I will prepare the appropriate paper with dollars signs. ...


Grey Seal, youíre intermingling the net economic effect of an annual trade deficit upon a nation and the effects of an enterpriseís global trade transactions upon their financial condition. Although the nationís aggregate enterprisesí trade transactions certainly effect the nationís balance of trade and the nationís enterprises are entities within the nation, they are not the entire nationís entities that are effected by aggregate enterprisesí trade transactions.
Although the better interests of the nation and that of commercial enterprises are often similar, (regardless of the political rightís denial), in many cases they diverge.

Enterprises purchase imported products at lesser cost to themselves.
The nationís trade deficit is a negative balance of trade that consequentially reduced the nationís gross domestic production, (i.e. GDP). Reducing a nations GDP of products reduce their net numbers of jobs, production facilities, and often the nationís capacity to produce.

Thereís cascading phenonium thatís particularly apparent in manufacturing industries due to mass productions great reduction of per unit costs. Production, particularly manufacturing production rarely occurs without the producer of the primary product receiving production support from other goods and service producers.

Elimination of the domestic primary producer due to importing, reduces the domestic market for the production supporting producers that previously served the primary producer. Even if lost sales to the primary producer didnít directly cause the elimination of the production support producer, due to the loss of production volume and economies of scale, the production support producerís increased costs per unit may not enable the that producer to remain in business. thus, further reducing the nations GDP of products their net numbers of jobs, production facilities, and often the nationís capacity to produce.

To summarize: Each individual USA person or enterprise purchasing imported goods gained direct financial benefits due to their purchases. Those enterprisesí net financial benefits were due to their purchases reducing the net costs of acquiring their inventory or producing their products.

But more than otherwise USAís trade deficits are:
Of net detriment to our GDP, numbers of jobs, payroll amounts and tax revenues.
Increased our numbers and the extents of poverty, and government social expenditures due to those increases.

You continue contending that USAís chronic trade deficits of goods are net economically beneficial to our nation?

Respectfully, Supposn
Gray Seal
I do continue to contend that the party which receives goods in exchange for paper money (especially fiat money subject to being created, inflated) is materially better off than the party receiving the paper money.

This alone is reason to doubt the value of GDP.
Supposn
QUOTE(Gray Seal @ Feb 21 2017, 11:40 AM) *
The Newt Gingrich story is further evidence that Gingrich is an idiot. He has been a successful politician with his ability to use crap economics to fool people who do not know any better.


Grey Seal, I contend, (or at very least I often state) that every political concept, act, law, or regulation should stand or fall based upon their own merits and faults. I consider myself to be a populist; Hillary and Bill Clinton, and Obama are too close to Republican positions.

Iím far from being a Newt Gingrich supporter and I try to refrain from considering ethical, moral, and other characteristics regarding peopleís personal lives.

Republican leadership have considered Newt Gingrich to be among their more intellectually able members of their party. Heís very intelligent, capable, and sharp. Heís a formidable debating opponent and no less a capable when he writes. Iím generally in disagreement with his conclusions regarding economics and other political questions, but I wouldnít dismiss him as being an ‚Äúidiot‚ÄĚ.

Respectfully, Supposn
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