Your Opinion Trade Deficit in the United States?

Question

The United States has run a trade deficit over the past two decades. Has this deficit been good or bad for the economy? Keep in mind that there is no right or wrong answer for this type of discussion. I want to see what everyone think about this so try to support your answer instead of just saying good or bad

Answer 1

I'll play the devil's advocate and say that it's been good:-)

Now, according to international economics, the current account deficit must equal the capital account surplus.  The two main components of the capital account are foreign direct investment (FDI) and portfolio investment, which is ownership of stocks and bonds.  When we buy more from foreigners than we sell to them, they have to do something with the dollars we give them.  So they invest it in the American economy.  FDI means concrete investment in the US, for example Honda factories in Ohio.  This directly creates American jobs.  Portfolio investments are also good.  They provide funding for American firms to expand and create jobs.  Thus, the trade deficit creates jobs, which makes it at least not as bad as it is often considered.

Answer 2

first, there is a right and a wrong answer to every question, drop this relativity nonsense, it's rotting people's brains.

now, for the question, I see nothing good about a trade deficit.  The deficit creates a situation where foreigners control excess dollars, and "re-invest" them in our system by buying stocks (foreigners now own about 2% more of our S&P 500 each year, in 40 years at this rate we will own none of our own companies), real estate, and mostly by financing our enormous budget deficit, which we pay back plus interest.

Secondly, the trade deficit reduces the value of the dollar.

Thirdly, there are only three ways to pay for consumption; with savings, with current production, or with future production.  (law of economics and pretty easy for a non-economist to understand).  running a trade deficit means you are choosing to consume more now, and pay for it with future production, in devalued dollars with interest.  a trade deficit is the national equivalent of using a credit card to live.  It's an attack on future generations that will pay it off after the users of the credit are dead.

In truth, the baby boomers will die off having lived excessively above their means, forcing their children and grand children to live well below their standard of living to pay it off, or risk default and the destruction of the nation as an independent country... all because they thought it would be cheaper to buy chinese made stuff at wal mart (which our inflation figures now prove isn't true either).

So in what way could we argue, utilizing economic science, that a trade deficit is good (for us... that is)?