what is wrong with this argument?

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A trade deficit means are consuming more than we are producing. To cut the trade deficit we either have to produce more and/or we have to consume less. In the short run with near full employment it is very unlikely that we can produce significantly more. Therefore we would have to consume less. I can think of only 3 ways to easily consume less rationing, raise taxes and inflation.

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Type: Question • Score: 1 • Views: 965 • Replies: 2

[+4] - engineer - 09/03/2018The fundamental fault is that your argument assumes a trade deficit is bad and to be avoided. You likely have a trade deficit with your local grocery store since you spend more money buying from...

@Neil Grossbard,

The fundamental fault is that your argument assumes a trade deficit is bad and to be avoided. You likely have a trade deficit with your local grocery store since you spend more money buying from them than they spend buying from you. I doubt anyone would say this is bad, but if you were intent on reducing your grocery store trade deficit, you could grow all your own food. Of course, you will not be anywhere near as efficient as the grocery store supply chain and you have to take time from all your other activities, maybe quit your job, etc, but at least you wouldn't have a trade deficit. This obviously doesn't make any sense. If you let the grocery store do its job of getting you good products and reasonable prices and you do your job, both of you win even though you have a trade deficit.

what is wrong with this argument?

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