Trade Deficit

The nation's Trade deficit was $60.3 in November, up 7% from the month before. Most of this increase was simply inflationary--with the explosion of Oil pricing and falling Dollar. The stated rationales, though, find base in the existence of the Trade deficit in the first place. We are in a vicious inflationary spiral, eroding the value of American products in relation to foreign products. The fall in American Exports for November--2.4%--was equally a result of the inflationary spiral--American product prices rising faster than the more-stable currency Competition. The current Administration, as expressed by Snow, would proclaim the dollar should be set by market forces; all the while the Government will not curb excessive Spending, the true existent Cause of the falling Dollar.

A short Course in Economics:

1)Trade deficits are automatically corrected by market forces. Trade exchange must shift without Government intervention, or the value of Trade products will automatically devalue for those running a Trade surplus. This devaluation will lead to purchase of Trade product from those running a Trade deficit, or less provision of Trade product from those running a Trade surplus; i.e., everything else will lead to a loss of profitability for all Trading enterprises.

2) The only thing which can interrupt this Trade balance is Government intervention. The real element here resides in the fact that this Government intervention meets failure, unless it is entered into by Both Governments: Trade Surplus and Trade Deficit nations. An attempt at intervention by only the Trade Surplus Government will lead to loss of Exchange value profitability--Labor and Capital liability exceed the Trade surplus. Government intervention by the Trade Deficit Government leads to loss of Employment, with resultant loss of native purchasing power for Imports.

3) Maintenance of Trade imbalance requires Government intervention by both Trading partners. China insists on pegging the Yaun to the Dollar; if it did not do so, the Trade deficit with China would be only about $3 billion per month instead of the current $16.7 billion. The Trade deficit with China would also be about $3 billion per month, if the United States was not running a Federal deficit.

4) Much contraversey will ensue from this statement, but the Federal Government would not be running a Federal deficit if the Bush Tax Cuts had never been passed. Federal expenses could be cut by 30%, if Defense measures had not be expanded beyond funding of Homeland Security. Imports would be 55% less than their current level, and American Employment would have acquired 4.7 million more Jobs. The Bush Tax Cuts were unsound Economic policy.

There is immediate need to introduce a Import Sales tax on Finished Foreign Products, but the impact of such a Tax will be delayed; while immediate reduction of Trade imports must be made. This Author immediately calls for a 7-Day quarrentine of all Ships entering American ports. This effectively requires a 25% increase in Bottoms to haul the same amount of Product, requires a 17% increase in Shipping Costs of Imports, and leads to a 7% increase in Consumer prices. lgl