Join Early Retirement Today
Thread Tools Search this Thread Display Modes
Old 03-09-2011, 10:41 AM   #21
MichaelB's Avatar
Join Date: Jan 2008
Location: On the road again
Posts: 21,125
Excellent job by Gumby explaining something that is not intuitive and mostly concerns economists, not people.

When you have a trade surplus you make more than you spend (as a country) and the difference you can lend to your government to fund the deficit. (Like Japan)

If your gov’t ran a surplus it would lend you the money to finance your trade deficit. (Like Hong Kong)

When you have both a trade deficit and a gov’t deficit you don’t have any money left over to lend so your gov’t has to borrow from someone else .

Originally Posted by kyounge1956 View Post
The problem is finding a way to expand A's economy.
Right. Except you need to invest new money to do that, and with public + private deficits, there isn’t any money for that either. So you need to turn to foreigners once again, asking them to come in and invest in your country. Hopefully, through employment, additional consumption, and taxes you will generate enough economic activity to get back on track.

MichaelB is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
Help with understanding expenses....?? mannyahles FIRE and Money 17 01-31-2011 07:52 PM
Understanding Deer Payin-the-Toll Other topics 32 02-22-2010 11:17 AM
Understanding the deficit harley FIRE and Money 5 04-03-2009 07:41 AM
Growing deficits threaten pensions Wags FIRE and Money 48 06-11-2008 06:35 AM
FIREcalc - what am I not understanding? gindie FIRE and Money 1 12-18-2004 07:24 PM


All times are GMT -6. The time now is 05:32 PM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2016, vBulletin Solutions, Inc.