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Thread: Dollar Down, Euro Up as U.S. GDP Data Fails to Sway Market

  1. #11
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    What is an healthy economy ? What about trade deficit and what about budget deficit ? What can be the consequences on the long run, if the USA retreat in themseves and are less trusted by their allies or partner ? How will it be possible to finance deficits ?
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  2. #12
    Veteran Member Eve1's Avatar
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    Quote Originally Posted by galatin View Post
    What is an healthy economy ? What about trade deficit and what about budget deficit ? What can be the consequences on the long run, if the USA retreat in themseves and are less trusted by their allies or partner ? How will it be possible to finance deficits ?
    Lets see how did the economic nationalism work out for other countries? Hmmm...
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  3. #13
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    Nationalism seems to be more on the side of the USA with the present administration..... Probably the main question is what to do to have all Americans benefiting from the globalization and not only the priviledged ones ?
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    Quote Originally Posted by galatin View Post
    What is an healthy economy ? What about trade deficit and what about budget deficit ? What can be the consequences on the long run, if the USA retreat in themseves and are less trusted by their allies or partner ? How will it be possible to finance deficits ?
    Yellen had decided not to raise rates so when that happens, currency will fall a bit. The US needn't be an interventionist meddling country to attract foreign investment. To attract foreign investment, the US needs to be an attractive place to invest generally. Of course if the US runs a budget deficit and the foreigners don't want to buy her bonds, the rates must rise, or, alternatively, the US can start actually balancing budgets. Indeed, if foreigners sell us valuable things, its up to them what they do with the dollars earned. If they don't want to buy US assets, fine, then they can buy US products, and if they don't want US products, the exchange rate will slide until that situation equalizes itself out.

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    Did the US didn't run a budget deficit, there wouldn't be bonds to buy. That was, in part, Alan greenspan's rational in supporting baby bushs tax cuts.

    Apparently Sweden is an attractive place to invest and do business. The reason has to do with a government that makes rational decisions, and reasonable regulations.

    The Heritage Foundation says:

    Sweden’s economy performs notably well in regulatory efficiency, with open-market policies that sustain flexibility, competitiveness, and large flows of trade and investment. The transparent and efficient regulatory environment encourages robust entrepreneurial activity. Banking regulations are sensible, and lending practices have been prudent. The legal system provides strong protection for property rights, buttressing judicial effectiveness and government integrity.
    Last edited by labrea; 30th July 2017 at 06:38 PM.

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    One other eement which needs to be considered is the fact that the US having the most important reserve currency can issue dollats almost indefinetly without facing the same consequences as other countries do, i.e. inflation, weakening of the value of the currency value toward other currencies etc... The dollars are absorbed by the reserves of other countries and are not usedto buy good or services in the USA. It is also why the US do not put the incentive on exports to balance their lmports. They live well on credit.

  7. #17
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    Quote Originally Posted by galatin View Post
    Nationalism seems to be more on the side of the USA with the present administration..... Probably the main question is what to do to have all Americans benefiting from the globalization and not only the priviledged ones ?
    Depends on the trade source. Heckscher-Ohlin informs us, with trade according to comparative advantage, capital wins and labour loses. That suggests some form of redistribution is required and the US has to further increase progressivity in tax/benefit systems. However, inter-industry trade is a more difficult proposition. There aren't easy comment on winners and losers to make. Perhaps the focus should be on firm ownership? Too much control of trade through corporations suggests policy should centre on increasing self-employment rates. For other developed countries that, at the very least, requires a generous welfare state to enable greater risk taking.
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    In my opinion one of the biggest challenge globalization brings is how to avoid trends, which lead on one side rich people to become richer and poor people poorer on the other....... The solution in affluent Western European countries was to grant social benefits, and at the same time to push professional training. Meanwhile you have still a lot of people who feel that they are not invited at the prosperity table and get little from it. It feeds populism and subjectivity.......
    Thanks from Æthelfrith and labrea

  9. #19
    Scucca Æthelfrith's Avatar
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    Quote Originally Posted by galatin View Post
    In my opinion one of the biggest challenge globalization brings is how to avoid trends, which lead on one side rich people to become richer and poor people poorer on the other....... The solution in affluent Western European countries was to grant social benefits, and at the same time to push professional training. Meanwhile you have still a lot of people who feel that they are not invited at the prosperity table and get little from it. It feeds populism and subjectivity.......
    It's possibly more difficult for a country like the US. There is, for example, an economic argument for protectionism (given its economic importance, optimal tariff analysis based on manipulating terms of trade). That's likely to be more influential on opinion than the levels of positive interventionism required to ensure all benefit from trade

  10. #20
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    And in the USA many people consider , that they do not need the others....... The idea of soft power, which is a necessity when you represent only 9% (about 50% in 1950) of the world trade when Europe is 36 %, is still not in the mind of the Americans...... But in terms of influence when you are at this level you need the others if you want to be a real big player.
    Thanks from labrea and Æthelfrith

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