The idea that the deficit with China means China has American Dollars but it neglects to consider that Americans have the goods they bought with their money. Deficit hawks seem to believe having money is more valuable than having the goods. If that were true no one would ever buy anything. Thankfully, it’s not true. Several years ago, a rather dumb, stupid, nut-case, idiot guy from Newtown Grant tried to make the point that:
….”The $482 billion that went to China goes on to pay employees who produced the goods and services. Chinese employees then spend it on other goods and services and so on and so on…. The $482 billion paid by the U.S. are in products such as shoes, clothing, iPhones, lap tops, cars, furniture, call centers, etc. Try using shoes to purchase a car. $35,000 worth of shoes will not purchase a $35,000 car. Money circulation stops when you purchase foreign products, with the exception of the retailers markups share of the price”…
What the dummy didn’t know is that you cannot walk far without shoes so the shoes keep on being used too, just as the money paid for the shoes keeps on being used. You cannot drive around on your money. To drive around you need a car. You cannot watch TV with money. Watching TV requires a chair, a sofa, or a bed, all of which keep on being used, just as the Newtown Grant guy wrongly claimed is a reason money is better than furniture. If he was correct, which he wasn’t and which he isn’t, no one would ever buy furniture.
What the dummy also didn’t realize was the deficit refers to the difference between imports and exports, not just the money itself. That the dummy is a member of the opposition is what sparked his false comments, in addition to his being rather ignorant of money, trade, deficits and payment balances.
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