U.S. worries about trade deficit during go-go '90s?

And worrying and focusing on this might be a good thing, or perhaps not so good. And the first step might be to compare the huge aggregate numbers to the huge U.S. economy as a whole.

From the following economics book, the trade deficit is one of the few things the author seems to worry about, but the downside and remedies don't seem all that catastrophic.

The Instant Economist, Timothy Taylor, Penguin Group, 2012, page 151:

https://books.google.com/books?id=E4K4nXvAu1EC&pg=PT143&dq=%22High-income+countries+have+historically+tended+to+run+trade+surpluses%22&hl=en&sa=X&ved=0ahUKEwj0k9LgkKLJAhUEKyYKHSziDpoQ6AEIHTAA#v=onepage&q=%22High-income%20countries%20have%20historically%20tended%20to%20run%20trade%20surpluses%22&f=false

"High-income countries have historically tended to run trade surpluses, and thus have been net investors abroad, investing in low-income countries. But in recent decades, the rest of the world has been investing in the U.S. economy on net. There is no precedent for this situation, and it doesn't seem likely to continue in the long run. At some point, the U.S. economy will need to repay this money. The question for the rest of the world is, how much in U.S. assets are you willing to hold? At some point the world won't be willing to keep adding to its portfolio of U.S. assets, and something will adjust. If less foreign financial capital flows into the United States, either we will have to lower the budget deficit, which means higher taxes and/or less spending; or we will need a higher domestic savings rate, which means less consumption; or firms will have to invest in their own growth. None of these options are attractive. But if the United States keeps running high trade deficits, one of these options—and maybe all three—must come to pass."
 
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And worrying and focusing on this might be a good thing, or perhaps not so good. And the first step might be to compare the huge aggregate numbers to the huge U.S. economy as a whole.

From the following economics book, the trade deficit is one of the few things the author seems to worry about, but the downside and remedies don't seem all that catastrophic.

The real question, the author fails to understand, is not how much in US financial assets does the rest of the world want to hold but how much do they have to hold. Take China. Roughly 25% of their exports goes to the U.S. If they, as so many love to speculate, tank the dollar by selling their holdings, then the dollar will collapse. But so will their trade because the Yuan will increase proportionately. And their ability to export to the US will be undermined. The same is true with the oil exporters and other exporters. They need to hold U.S. Dollars so that their export position remains competitive.

The US will be able to retain a current account surplus as long as the consumer economy remains strong, the economy remains stable, and the budget remains relatively stable.
 
Alright, so both us and China and us and OPEC nations are good for each other.

A complex game theory situation, and more complex than poker because this one is both competitive and cooperative.

And I particularly like your last point which I take to mean, no abrupt moves. No 'clunk' moves as it were. Rather it's a situation of steady as it goes.
 
U.S. worries about trade deficit during go-go '90s?

Is this calling the US economy of the 1990s 'Go Go' or postulating what would happen had it been booming. I managed one business and started another in 1990s & while the economy was stable & rising it was nothing like the bubble economy of the post 2000 - 2008 era. While the dotcom sector was marked by "irrational exuberance" & thee were some other excess the larger core sectors like manufactoring and construction were relatively stable and reasonable growth.
 
Yes, I am calling the U.S. economy of the '90s 'Go Go.' I'd almost be afraid of something hotter, and perhaps that was what happened in the 2000s.
 
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And I compliment you on your two businesses.

I admire entrepreneurship. I understand that the baseline odds are that 80% of new businesses fail, often because of undercapitalism. So, a person can be plenty talented and hardworking, but there are just timing factors, market factors, demographics of an area, traffic patterns, etc, etc. I also think of starting a business I can run out of my home or car where I don't have all the expenses of a fixed location.

I feel I'm a plenty good enough writer, but that's more of an avocation. In the workplace, I feel I often take the approach of a coach, have talents in different areas, so I do have things to offer. But I'm not good at juggling ten different managerial tasks all at the same time, and maybe that's one of the prerequisites of success in starting a business. Not a guarantee by any means, but putting the odds more in your favor.

Any advice or episodes from your experience you care to share would be very much appreciated.
 
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Yes, I am calling the U.S. economy of the '90s 'Go Go.' I'd almost be afraid of something hotter, and perhaps that was what happened in the 2000s.

Yes and no. From 1990-1994, you cant call it that. And within manufacturing, commodity and export related industries it certainly was not in 1998 and 1998. But the TMT bubble and boom in pharma certainly qualify as go-go in the late 90s.
 
And the author Timothy Taylor is also worried about the federal budget deficit. And yes, President Obama's stimulus package did cause an increase, but the main long-term issue is rising health care costs over a matter of decades.

I haven't read his whole book, even though he seems to write much better than the average economist!

The Instant Economist, page 182:

This budget forecast is not especially controversial. All the long-term projections from the major government accounting offices are broadly similar. If spending on Social Security, Medicare, Medicaid, and other health care programs rises as projected, we're going to face very high levels of government spending. We will pay for this spending either with huge and historically unprecedented tax increases, huge and historically unprecedented budget deficits, or both.
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The American political system has shown little ability to hold down health care costs, which have been rising sharply for decades, and little ability to address the long-run funding problems of Social Security, which have been well-known for decades.
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One indirect option worth consideration is enacting public policies to increase private saving. If this approach worked, it could provide more financial capital for private investment and also make the U.S. economy less dependent on foreign investment.

page 183:

The long-term projections for U.S. budget deficits and the accumulated debt burden are grim. The projected budget deficits over time seem unimaginably large. They would eat up a huge share of the available investment capital and hobble economic growth. I can't imagine that current trends will go on. But I also can't foresee what political decisions will be made to taxes or spending that will substantially reduce that deficit. It's almost enough to make an economist humble.
 
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