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Trade Deficits

One of the consequences of trade imbalance is that trade imbalance causes a nation to lose as wealth, itís prosperity. You can think of trade imbalance like continually spending more money than you earned in your weekly paycheck. After awhile, all the money in your bank account is depleted. And now you have to use your credit cards, in this sense, you're going into debt. You're spending money that you don't have, is that ever a good thing?

Trade imbalance represents the balance of revenue or money between two parties. If the United States imports or buys more than the goods it sells. It is in a sense, its spending money it hasn't earned or it is spending it's surplus, it's wealth. Our nation, or our economy earns money or revenue when it sells goods and services abroad. That's like when we work for our paycheck. We provide something, and we are paid for it. Our nation, buying more goods for importing more goods than it sells is like a person spending more money than it earns. When our nation does this it creates debt, that there will have to be financed through the sale of bonds and other financial vehicles or instruments. These debt vehicles or bonds are now sold in the financial market, and guess who buys these bonds? The very countries with which we have large trade imbalance, China, Japan, and other nations around the world. China's currently holds a very large portion of US bonds. Recently, when housing rates went up, this was a result of increases in the bond market, which were a direct result of China's buying less of America's debt than it had in months past.

So we can see economic stability in the United States can be directly tied to the value of or demand for our debt in the financial markets. This places the United States in a very vulnerable position; large powerful nations such as China could significantly affect American financial markets by dumping the bonds that holds. This action would cause huge upsets in the in the stock market, in the lending market, and in the housing market. These actions could virtually cripple the United States economy and our ability to make war simply because there would be no money to pay for it and no one to buy the debt would be offering. In essence, they would be foreclosing on the United States.

Consider that thought for a moment, pretty frightening, isn't it? The other frightening concept about trade imbalance is loss of jobs. As trade imbalances, more and more jobs, that are being shipped overseas. Those are jobs which pay for support and nurture American families. As wealthy companies make deals with Chinese companies or open subsidiaries in foreign lands for avoidance of US labor cost, jobs are lost and our economy suffers further decline. This begins the downward spiral of the nation, it spends more than it earns, and its people have no wealth to invest or to protect themselves against difficult times, they are in fact made poor. Is this the future, we seek for our great nation?

Now let's examine American economic stability from the position of no debt, of no trade imbalance, what do we see? We see a country whose economy is stable, vibrant and secure from outside intervention, because it owes no other nation, No other party, and no other people. Many of the backdoor politics deals we see pushed upon the American people happen as a result of private discussions of American debt.

When we trade with nations at a zero sum game, we are not injured or harmed by doing business with our neighboring nations, or other nations across the globe. When the trade imbalance is slightly positive towards us that causes increased wealth to flow into the United States. In essence, it's like spending less than you earn, when you do that. You have reserves or savings, as savings rise investment capital rises as does the ability to sustain the nation in times of crisis or times of war.

Currently, the United States is sliding on a slippery slope of an ever-increasing federal deficit and ever-increasing federal debt, and an ever increasing trade gap or deficit with the rest of the world. For too long, Americans have become drunk into a cheap goods coma, one that if which we don't come out of will forever spell the end of the sovereignty of the United States, and the freedoms that we have come to love and enjoy. We will have become, as the Israelites of old that were sold into bondage in Egypt, we will live in our own debtorís prison. Is a $30 DVD player really worth the loss of everything we hold dear?

The way that we change this tide is to start supporting American companies, stop buying goods made in nations that hold enormous trade deficits with the United States. Stop buying goods from countries that employ child labor, that indulge in slave labor and environmental toxic poisoning of their local environments so that American companies can reap huge profits. We change this trade deficit, by changing our personal spending habits, by no longer living on credit spending to excess. We as a nation must become thrifty, we must live on less than we earn, and save versus spend for luxuries that we really don't need.

The cure for a trade deficit, and ever spiraling debt is self-restraint. If we don't have self-restraint, we will simply be passing these burdens on to our children and our grandchildren and their grandchildren. And they will get larger and larger and larger until they are consuming and freedom is lost in the name of debt servicing. Is this really the future, we wish to leave? Is this how we wish our generation to be remembered?

If you're concerned about our trade deficit, live a self-reliant life, save 10% of your salary every month. Write your congressman and encourage them to balance the budget, to reduce spending, and start to pay off the federal debt, to buy back the bonds we have sold abroad that we, it's citizens may once again be the owners of America.

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