Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
You don't need to run a trade surplus if your trading partners are willing to lend you their resources, at effectively negative interest rates, so that you can buy their goods. Lending to the US in dollars only to be repaid at a later date in devalued dollars results in lending at effectively negative interest rates, and the only reason anyone would do that is because they have no other choice -- they have been coerced and plundered by the more powerful partner.  That's the connection between borrowing and plunder in a modern empire.
by santiago on Thu Apr 15th, 2010 at 10:38:10 PM EST
[ Parent ]
This, however, looks only at the stock of finished goods.

If the people who lend money to you at sub-zero interest rates are playing a long chess game and you're playing a short-term next-quarter game, they'll end up with all the productive power, and you'll end up with a structural import dependency.

And the guy with the industrial capacity is the guy with the power. Steelmakers can survive longer without bankers than bankers can survive without steelmakers.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Apr 17th, 2010 at 09:06:51 AM EST
[ Parent ]


Occasional Series