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That's our dollars coming back home. You purchased made in China crap with US dollars didn't you?
Yup, but I'm also a big saver.
Chinese buying assets mean there is a change in net foreign assets between the US and China. This can happen only if, outside of these real-estate transactions, the US are running an account deficit with China, meaning the US consume more than they produce.
i.e. In other words the US don't save, and sell real-estate to finance their way of life.
Did you say you studied economics?
Bigger mortgages is the opposite of living within your means.
Please refer back to the first sentence above.
The current account is also the sum of accounts in the economy. If a lot of people take a big mortgage, that pushes down the national account.
This is the opposite of "living within one means".
This can happen only if, outside of these real-estate transactions, the US are running an account deficit with China, meaning the US consume more than they produce.
Not necessarily, eg. 1
We buy $1 million worth of red wine from France.
France buys $1 million worth of toys from China.
China buys $1million worth of American property.
Because international trade takes place with US dollars, that money can come from anywhere. We do not NEED to have a current account deficit with the Chinese.
eg 2.
We do not have a current account surplus with China, yet an American can go to Shanghai and buy an apartment there. We do not need a surplus to buy their property, and they have, but don't need to have, a current account surplus with us to buy American property.
meaning the US consume more than they produce.
i.e. In other words the US don't save, and sell real-estate to finance their way of life.
And even more Treasury Bonds.
Us Americans don't know how to save. We are spoilt rotten. :(
Bigger mortgages is the opposite of living within your means.
Please refer back to the first sentence above.
The current account is also the sum of accounts in the economy. If a lot of people take a big mortgage, that pushes down the national account.
This is the opposite of "living within one means".
Man, you confuse the heck out of me.
that money can come from anywhere. We do not NEED to have a current account deficit with the Chinese.
Humm... If these are Chinese buyers by definition the money comes from China.
A current account deficit with China by itself doesn't prove the US doesn't have a larger overall surplus with the rest of the world, unfortunately I doubt the US balance of accounts with the rest of the world looks much better than that with China.
they have, but don't need to have, a current account surplus with us to buy American property.
While individuals can do whatever, in aggregate if Chinese are buying US assets, it means these dollars are coming from somewhere.
Yeah... maybe Americans are buying Chinese assets en-masse, or the Chinese are selling other US assets, but to be practical: we know where these dollars are coming from: trade.
i.e. Americans consuming more than they produce.
But in any regard I will take your short answers as a sign that you don't have anything meaningful to add to the debate seeing as how I already more or less settled it anyway. But thanks for trying.
No, it doesn't have anything to do with D or R it is just basic economics, no matter what the policy is.
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