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Impact of a Trade Imbalance (Two Minutes to Read) 

9/1/2016

 
Because of horrendous trade deals like NAFTA (North American Free Trade Agreement), the U.S. now has close to an $800 billion dollar trade shortfall. Our shortfall with China alone is $500 billion. They must really think we’re stupid.  The problem is that not enough people know what this means to us from an economic perspective and if we don’t know we don’t care and believe me, we need to start caring a lot because our future livelihoods depends on it.  
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Every dollar that leaves our country due to a trade imbalance is gone and no longer helping our economy. Think about it, our Federal Budget is over $3 trillion dollars so we lose close to a third of that by giving money away to other countries. We could fairly quickly make it a balance budget if we get out of these horrendous trade deals. The only way some of the money makes its way back is through investment into the U.S. through countries like China buying U.S. securities. But even with this, the money doesn’t actually come back for good it’s temporary and we have to pay it back with interest. Kind of scary when you think about it that China and Japan own part of our Social Security Trust Fund. What happens when they get tired of putting money in it?

What would happen if we cut the trade deficit in half which is very much doable with the right trade deals? I calculated what $400 billion dollars being put back in our economy would do and it would sustain annually over 7,000,000 new jobs. What a huge difference this would make in the lives of these people and their families. Of course these 7,000,000 new workers would be spending money on things like entertainment, food, housing, etc., thus injecting our economy with the $400 billion and it would continue to go round and round benefiting everyone in its path including State and Federal Governments as we all know how much they love to tax everything. The bottom line is that better managing trade can lead to outstanding economic growth and this is why Trump is putting so much emphasis on it. Hillary has shown she wants the status quo when it comes to trade agreements which we’ve seen is greatly hurting our economy.

Our Gross Domestic Product (GDP), would go up giving us economic leverage around the world. As a reminder, our GDP reflects all the output in dollars of everything we produce whether products or services. The more we sell in the U.S. the higher our GDP grows and the more money we have to spend making us more attractive to countries around the world to do business with us.

Obama’s GDP growth rate over the last eight years has been the worse the U.S. has seen since the Great Depression. Basically, his economic policies like the Stimulus Plan, have been completely ineffective. Remember when Obama made a joke of it and said: “I guess the shovel ready projects weren’t so shovel ready.” Not something in my opinion that should be laughed about.  Sure politicians aren’t hurt by bad economic times, but we sure are.

Hillary Clinton strongly supported NAFTA and she supports a new Trans Pacific Partnership Trade Agreement which would be awful for our country but beneficial for helping countries like Mexico, Peru, and Vietnam all of which already have trade surpluses in dealing with us. The agreement addresses poverty in these countries but not in the U.S.
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The bottom line is we must have a bunch of idiots representing the U.S. in trade agreements. If my company would’ve made these types of deals we would’ve gone bankrupt which is exactly where we’re headed. Surely a country our size with the leverage we have, could do a better job making deals that would benefit its citizens. We should take the people who have made the trade agreements that have tanked our economy and put them in prison for treason…it sounds only fair.


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    Author: John Mann

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