Comments by "Vale Tudo" (@valetudo1569) on "The Economy Is at a Hinge Moment" video.

At one hour in, I have to disagree about the trade deficits not matter for jobs bc we created so many jobs last year. The thing is, the trade deficit requires us to have massive budget deficits to stimulate the economy and avoid job losses that would result from the trade deficit. Ideally, our trade would be balanced and we'd import as much as we export.. that would give us more room to reduce the deficit. So yes we had great job growth, but we also had record deficits
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@abbaharuna3087 So I didn't get the connection either, but there is a great economist named Michael Pettis who helped me understand this. So, trade deficits are not inherently bad because if trade is truly balanced in the world - every country would have surpluses with some and deficits with others. At the end of the day - the balance of payments would all balanced out. The issue is, the US absorbs 2/3rd's of the world surpluses. This is mainly due to China, with Japan and Germany as much smaller offenders. China especially creates these unnatural distortions. Basically our huge and persistent trade deficits basically force our policy makers to do 1 of 2 things: 1 balance out by letting unemployment to rise, or 2 continually stimulate through budget deficits to keep employment up. Ofcourse option 1 is politically untennable, so they choose option 2. This is the root causes of our deficits... minus one off things like afghan war, Covid, etc... Its way too much to explain in a comment but google Michael Pettis and the US trade deficit and budget deficit to get a better idea. It actually makes a ton of sense.... and if you notice - the more our trade deficit increased, our budget deficit quickly followed.
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