Nate,You are probably right. In my defense, I was unsure because
his tirade was so out there that I found it hard to differentiate between what
he actually meant to be absurd from that which merely turned out to be absurd
without his intending for it to be so.
@Twin Lights "[H]is last paragraph is a joke."A joke which,
apparently, went right over someone's head.
Mr. Williams has stumped me. I thought that I had a fairly decent understanding
of double entry booking and I thought that I understood the difference between
equity and debt. Maybe it's all a matter of semantics.As a business
owner, I can start a new business using my savings or I can borrow the money. In
the first case, the business owes me money. In the second case, the business
owes the bank money.I understand that when I spend money and receive
goods of equal value, I've just exchanged money for assets. That works as long
as someone sends me money in exchange for my products. I pay for materials. I
pay for labor. I pay for overhead, including taxes. My customer pays me for
all costs. If I charge more than my costs, I make a profit.What
happens when I spend for materials, for labor, and for overhead and nobody buys
my product? I go broke.Our Country is buying products but it isn't
selling products. We're going broke.
Years ago I read a book (author Nesbitt?) about the US moving from a
manufacturing (making things such as autos, clothes, ships, etc.) economy to a
service economy (flipping hamburgers, selling insurance, etc.).The
rest of the story is that we now have moved from a service economy to an economy
where workers are supported by the government with unemployment checks.
Examples: I called my bank (Chase) today and got someone in India. I called my
phone company for assistance last week and got someone in Barbados. I called
the DNews two weeks ago about my subscription home delivery service and got
someone in the Philippines.Williams' analogy is missing something...
If I exchange $100 for a TV make in China, China merely lends me (via my
government) back the $100 so I can buy another TV or something else from
them.The bad news for me is that the TV will eventually wear out and
need replacement. The bad news for China is that the $100 is losing value
The picture in this article shows just one employee. It is true, he has a job.
And he might pay a little to get his lawn mowed. But the society is not better
off.If I give my grocer a dollar, and he hands me a candy bar, and I
eat the candy bar; now he has a dollar and I have nothing. It is true others
have invested (loaned us) 15 trillion dollars, but I don't see that as good
I used to think that Williams taught bad economics in his editorials in a
cynical attempt to attack liberals (presumably because real economics is on the
side of Liberals, or perhaps he thinks his Republican base can't grasp subtle
economic thought? But I digress), but here he is teaching bad economics, and
there is no attack on liberals to be seen. It's just a roundabout justification
that the trade imbalance is fine because it is supported by the federal deficit.
What a bizarre position for a conservative!
Stunning.Dr. Williams gets so many things wrong in the same article.
It is as if he were a political shill rather than a serious economist . . .First, the issue is not strictly manufacturing jobs. Look at
manufacturing per person as a measure of how we stack up against our
competition. Here, we are just behind Italy and just in front of Canada. Japan
is well ahead and Germany leads the pack. China is well behind but moving up
fast. Second, debt (US Treasury Bonds) are an investment in America
- hence a good thing? When the country goes in debt, are we are all just
"investing in America"? Please. Trading goods for debt does not mean
things are in balance. If you doubt it, try it.Third, what we trade
for matters. A lot. TVs are not long-term assets. Food is not long term
anything. Trading debt for food means you are going down fast.Finally, his last paragraph is a joke. If we print money with no real economy
to back it up, eventually the dollar will be worthless. We will cease to be a
functioning economy.Why does the DN print such nonsense?
As agricultural jobs vanished they were replaced with manufacturing jobs that
paid better than the agricultural jobs they replaced. As manufacturing jobs
vanished they were replaced with service jobs that paid nowhere near as well as
the manufacturing jobs used to. That is the problem.Running large
trade deficits in perpetuity will ruin a country. The dollar's status as the
world's reserve currency requires that we run some trade deficits, but not
anywhere near what we have been running for the past thirty years. Mr. Williams
seems not to understand that. Virtually every other economist in the world does.