Sometimes animal spirits work wonders – as here in Carpe Diem's Mark Perry, again adding his powerful voice to the argument against using political boundaries as excuses to restrict the flow of trade.
Forget the Political Boundaries
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wooooooo yaaa
Did anyone else get a feeling of 'circle web-surfing'? Don wrties an article about Mark's aricle which is about Don's recent article on Protectionism? :S
Speaking of animal spirits…
this made me chuckle this morning
I am for free trade also but would not a persistent trade deficit result on capital outflows from the nation with the persistent trade deficit and wouldnt this in turn result in a lower value for the currency of this nation thereby resulting ultimately in higher prices throughout the economy? If I am wrong, please explain to me why but this seems to me to be the end result of persistent deficits.
I am for free trade also but would not a persistent trade deficit result on capital outflows from the nation with the persistent trade deficit
What is capital?
Where does the money go?
Sam: I mean US dollars going overseas in exchange for goods sent here. Would this not eventually lower the exchange rate of the US dollar (and has it not done so already looking back over the past few decades)?
Bill, the dollars will eventually "come home." They have to; they do no good to sit under Chinese mattresses, or Korean mattresses, etc. Because the dollars return, there's an equal push to counter the initial pull.
Think about this: what do the Chinese do with all the dollars they get from us?
Good points, Perry. Do you think though that persistent trade deficits weaken a nation's currency – its unit of account?
That's weird… I just noticed that link didn't seem to post.
This was the comic I posted the other day… an interesting take on animal spirits, ironically played out by cartoon animals:
http://comics.com/pearls_before_swine/2009-04-25/
Trade creates wealth, of course. But trade can occur via products moving or producers of products moving. Both represent free trade, and thus both are wealth creating. Blanket support for trade thus imply opposition to borders. Without borders is there a nation? What is a nation? Why do nations exist? When you can answer these questions, then you can pontificate on free trade.