> Insofar as this incoherent statement goes, when we sell an asset abroad and someone
> abroad pays for it, it is "like value for like value",. . .

Some seem to have forgotten that money has no intrinsic value in and of itself. It is not the wealth itself, but merely represents actual wealth that has been traded away, in return for a marker. Which is then later traded for some other real wealth, hopefully of equal value.

So who in there right mind, would trade a greater value away for a lessor one. It might seem that they are, but not so. We are trading a lessor value of commodities exported for a greater value imported (as measured by skewed exchange rates); thus the perennial trade deficit. But our trading partners are not stupid. They are collecting the difference in our capital assets. It is only those capital assets that balance the trade deficit, making it seem like value for like value. But it is not an even exchange; as we are sending the "seed corn" (capital wealth), along with those commodities!


> . . . . even if the currencies are unpegged to gold (they are mostly pegged to the
> dollar, itself pegged to a basket of commodities). . . . . .

The dollar isn't "pegged" to anything, and certainly not to a "basket of commodities", and not even to oil, or any other thing of intrinsic value. The dollar floats with respect to actual wealth. And even if some foreign currencies are "pegged" to the dollar; that pegging is skewed, anything but "intrinsic value for intrinsic value". Besides, dollar inflation in the commodities markets, is already out of hand (especially Food and Oil). Our purchasing power has been sinking like a rock. Our politicians have been covering that up with smoke and mirrors, and clever banking gimmicks (now failed) for at least three decades now.


> The point of international trade, however, is to enhance everyone's purchasing power
> by exercising what's called comparative advantage, e.g., China makes consumer goods
> which we import and we make high value added goods for export.

Define "everyone's". Actually, it only appears to improve our (American) purchasing power. It however, does not. It is pure smoke and mirrors. In the long run, it is destroying American jobs much faster than prices for those goods are sinking. In California's interior, unemployment is near 20% and still rising according to media reports. Mind you, this region is in fact where much of our export value is produced. I think I can say without challenge, that unemployed people have little or no purchasing power!

All of that is mostly a direct result of skewed exchange rates, which also directly reduces the power of foreign commoners to purchase American goods. So as it now stands, international trade is NOT performing as you indicate. Moreover, China does not have any natural "comparative advantage"; but it does have a major natural disadvantage - 10,000 miles of ocean. But that dis-advantage is more than overcome by skewed exchange rates, along with child labor, near slave wages, health and safety shortcuts, and a total disregard for their own environment.

Since American's would prefer to be more respectful of the laborer and more careful with our health and the environment, we have passed regulations to ensure it. But these do not apply to Chinese imports. It is then absurd to expect our own industry to be able to compete with all this corner cutting, in a badly unbalanced playing field. Even Thomas Jefferson expounded on that principle of keeping the economic playing field level, when he tried to get abolition of slavery into the Constitution (so he could free his slaves and still be able to compete, which he understood he could not do otherwise).

Ultimately, exchange rates are going to have to be leveled and kept that way, and tariffs will have to be applied to account for differences in labor and environmental laws; or America just gives in to labor and environmental abuses here as well as there; or America sinks to the bottom of Davy Jones locker.

It will be hard on American consumers for a while to stop the dollar speculators, but in the long term, it will be great for American employees, as they will again be able to earn their own "purchasing power". Too bad Clinton already gave that store away by treaty; and if history is any predictor, any attempt at leveling this economic playing field now, could easily lead to war!

But as I said in my previous post, we are the ones who dump any politician that dares to tell it like it is. We just don't want to hear it. WE expect them to "provide" never ending good times without having to actually produce what good times are made of; never mind that no politician in 240 years has ever produced an ounce of actual wealth by virtue of his/her office. That was always done by the hard work of the common man, the people themselves; and we could do it again - If . . . .

Was it Pogo that said, "we have met the enemy, and he is us!"

OPB