Where is the US economy headed?

Richard Saunders wrote:

okie wrote:
Using the price of gasoline as an indicator of the economy is a poor one, Saunders. Look at the price of gasoline in other countries and $3 looks pretty cheap compared to most.

Im using it as an indicator of inflation.

I have frankly been surprised that the rise in cost of energy has not caused more inflation in the government's inflation statistics. Perhaps the statistics might be cooked to some extent, but to counter that suspicion, we also reap the benefits of cheap foreign imported products, many of which can be purchased more cheaply now than 30 years ago. So perhaps it balances out. I have not studied that issue to be honest. And frankly I hope they err on the low side of inflation, as then the inflation percent that is cranked into every Social Security check each year is kept at the minimum growth, because it is crucial in reducing the impact of rising and compounding entitlement expenditures in the budget.

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"Comparative advantage is an old economic term that most college students who have studied Economics 101 understands.

That we are able to buy "cheaper" products has been going on since foreign trade came into being.

Nothing new.

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okie wrote:

Richard Saunders wrote:
okie wrote:
Using the price of gasoline as an indicator of the economy is a poor one, Saunders. Look at the price of gasoline in other countries and $3 looks pretty cheap compared to most.

Im using it as an indicator of inflation.

I have frankly been surprised that the rise in cost of energy has not caused more inflation in the government's inflation statistics. Perhaps the statistics might be cooked to some extent, but to counter that suspicion, we also reap the benefits of cheap foreign imported products, many of which can be purchased more cheaply now than 30 years ago. So perhaps it balances out. I have not studied that issue to be honest. And frankly I hope they err on the low side of inflation, as then the inflation percent that is cranked into every Social Security check each year is kept at the minimum growth, because it is crucial in reducing the impact of rising and compounding entitlement expenditures in the budget.

Ah, nothing like cheap crap from China that I don't really need, to make me feel better about the rising cost of living in America.

Cycloptichorn

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Cycloptichorn wrote:

Ah, nothing like cheap crap from China that I don't really need, to make me feel better about the rising cost of living in America.

In an indirect fashion, China also lowers the price you pay for American merchandize. Without the Chinese, many Americans who would buy from them would buy American instead, driving up the prices of the American goods you buy.

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Thomas wrote:

Cycloptichorn wrote:
Ah, nothing like cheap crap from China that I don't really need, to make me feel better about the rising cost of living in America.

In an indirect fashion, China also lowers the price you pay for American merchandize. Without the Chinese, many Americans who would buy from them would buy American instead, driving up the prices of the American goods you buy.

Is it really that linear an equation?

If an American manufacturer sees his merchandise sales go up significantly, does this not provide more capital that could be re-invested in more efficient production lines?

Cycloptichorn

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Cycloptichorn wrote:

If an American manufacturer sees his merchandise sales go up significantly, does this not provide more capital that could be re-invested in more efficient production lines?

The same is true if a Chinese manufacturer sees her sales go up significantly. American and Chinese manufacturers alike can re-invest their dollars in more efficient American production lines -- or more efficient Chinese production lines. In practice, they'll choose whatever investment promises the greatest profit for them. The argument from re-investment, then, cuts both ways.

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Thomas wrote:

Cycloptichorn wrote:
Ah, nothing like cheap crap from China that I don't really need, to make me feel better about the rising cost of living in America.

In an indirect fashion, China also lowers the price you pay for American merchandize. Without the Chinese, many Americans who would buy from them would buy American instead, driving up the prices of the American goods you buy.

Plus a host of other spin off effects, Thomas, such as the one I mentioned above. Without Chinese products, the cost of living index would have climbed much faster, thus the index applied to cost of living or inflation increases into entitlement payouts like Social Security would be spiraling at a much higher rate, compounding into a totally unmanageable budget item. It is bad enough as it is.

Cyclops, I have said the same things you have said, "cheap Chinese products," however to be totally honest, the products are affordable, and I find them to be of increasing quality. We therefore can purchase luxuries or items that we would otherwise need to do without.

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No. Inflation is a result of the Federal Reserve Bank printing more money than there are goods to buy with it. It isn't affected much by trade. If America decided to boycott China, it would doom its gains from trade and be purer as a result. But inflation would be unchanged, because the Fed would print less money.

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okie, What you are saying about Chinese products is true; they are cheap and their quality is improving. That's what comparative advantage is all about. Because of these simple facts, China is enjoying greater investments by foreign companies including American and Japanese. To be a world competitive country, international companies are required to remain competitive; that means make every effort to reduce cost. This trend will continue as long as China and India maintains a good education system to advance to economy to the "next" level. This is the foundation for all "good" economies.

That's the reason why I worry about the US economy; our educational system is not keeping up. We are dropping in math and science compared to other developing countries.

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Thomas wrote:

If America decided to boycott China, it would doom its gains from trade and be purer as a result.

Grrrr! I mean poorer, not purer, of course. What an embarrassing typo!

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Just an inadvertant manifestation of your latent European judgementalism.
:wink:

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cicerone imposter wrote:

That's the reason why I worry about the US economy; our educational system is not keeping up. We are dropping in math and science compared to other developing countries.

I am getting worried, as we seem to be agreeing too much here. I agree with the above.

You probably won't agree with me concerning the reason however. In my opinion, too much federal involvement, too little real local control and too much political correctness being taught. One big reason, the teachers union in all of this. It is also a result of cultural problems, with movie stars dominating news as if they are important, too many single parent families, unmarried parents, unstable families, etc. Also, the emphasis is on sports, not academia. We have gotten soft, imposter, to put it bluntly. We aren't hungry anymore. Yes, there are many outstanding students and individuals, but the percentage is down in my opinion, and we need more science and math students, not political science and journalism majors. Thats a real fast assessment, and it could stand some more thought and research, but I doubt if I am too far off.

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Agree; too much federal interference in our educational system; schools are now teaching students to past the "standardized" tests at the expense of creativity, individual support, and the arts. Educators should know that not all students advance at the same age, nor have the same interests. Forcing a round peg into a square hole will fail, no matter how hard everybody tries to make it successful.

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cicerone imposter wrote:

Agree; too much federal interference in our educational system; schools are now teaching students to past the "standardized" tests at the expense of creativity, individual support, and the arts. Educators should know that not all students advance at the same age, nor have the same interests. Forcing a round peg into a square hole will fail, no matter how hard everybody tries to make it successful.

This is an unfair criticism. Before the standardized tests there was damn little creativity or individual support in our public schools. Unionized professional "educators" are all too aware of the supposed individuality of students and various groups of them. They have created a remarkably successful permanent jobs program (for teachers, not students) out of a multitude of specialized "programs" -- none of which do better than the generally dismal record of the system as a whole.

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,,georgeob, I don't know about you, but I see less and less support for individual students, less math and science students, and minorities - especially blacks and Hispanics - dropping out before they graduate at much higher rates. It's broken, and it must be fixed.

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Deficit Falls to $205 Billion
Jul 11 08:52 AM US/Eastern

WASHINGTON (AP) - The nation's budget deficit will drop to $205 billion in the fiscal year that ends in September, less than half of what it was at its peak in 2004, according to new White House estimates.

President Bush planned to discuss the figures in an afternoon appearance.

The new figure is considerably smaller than original estimates. In February, the White House predicted that this year's deficit would be $244 billion because of stronger-than-expected revenue collections. The deficit hit a peak of $413 billion in 2004 and was $248 billion last year.

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WOW! 205 billion defecit

HOOOOORAY!!!!!

Under Clinton we had a surplus.

BOOOOOOOOOOOOO!!!!

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xingu wrote:

WOW! 205 billion defecit

HOOOOORAY!!!!!

Under Clinton we had a surplus.

BOOOOOOOOOOOOO!!!!

And this doesn't any of this include the Iraq war.

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xingu wrote:

WOW! 205 billion defecit

HOOOOORAY!!!!!

Under Clinton we had a surplus.

BOOOOOOOOOOOOO!!!!

Yeah, and don't forget to add 144 Billion dollars to that total - the costs of the war in Iraq and Afghanistan this year. Not included in the 'bush budget' precisely so idiots like our friend here can post articles showing how 'low' the deficit is in the middle of a war.

Also, maybe add in the 50-100 Billion they jacked from the Social Security Trust fund.

It's all in how you spin the numbers...

Cycloptichorn

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Some people's ability to find good news within all the obvious bad news is amazing! They'll tiptoe through the mine field to find one speck of safety the size of a pinhead, and celebrate that as enormous gain for Bushco. Makes you wonder what kind of brain is needed to do that?

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Where is the US economy headed?

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