[Puffer Fish]

For people who are stupid and brain dead enough to believe that "trade" simply just represents an exchange of goods and services that will benefit both countries.

You people are real simpletons.

Have a look at this:
US Assets are Falling in the Hands of Foreign Owners at Record Pace
http://www.ispyetf.com/view_article.php ... wne&ID=257

As Warren Buffett, America's second richest billionaire, says, Americans are selling the farm to finance their spending.

That's essentially going to mean years of America having to export things to creditor nations without getting anything in return, beyond and above just what the trade deficits were.


Buffett even directed his own cartoon to try to warn people:

Some people will bring up the theory of Comparative Advantage, but the concept in that theory doesn't really apply when one country is trading away it's capital rather than products and services.

That turns out to be the primary "comparative advantage" of wealthier countries: their wealth. Trading it away.


I've never seen a textbook example of comparative advantage where one country's comparative advantage was it's land (as the most obvious example).

Obviously in these sort of scenarios, where capital is being traded away, that comparative advantage isn't sustainable in the long-term.

I also don't believe the economy of the U.S. is truly as fundamentally reliant on international trade as many people assume.
I mean, given 4 or 5 years it wouldn't be that big of a strain to convert back to local reliance. (with only the exception of a small number of specific commodities, like oil or coconuts for example)

[Puffer Fish]

In normal trade, where products & services are traded for products & services, one country gives $10 in products or services and gets $10 in products or services back.
When, on the other hand, one of the countries buys up another country's capital, it can continue getting products/services long after the trade deficits officially end. Basically, they no longer have to buy the wheat because they own the farm. They're going to get a lot more back than they gave in, because they invested that money, rather than just immediately spending it.

American companies will be owned by Chinese, if not in whole than in part. When those companies pay out dividends, it won't be Americans spending that money. (And even when the money is spent, it won't necessarily be going immediately to American jobs, it might be some other Chinese person who wants those US dollars so they can also invest it)

The other issue, of course, is that while trade deficits are happening those jobs are going to another country.