Just Keeps Getting Worse: Services Trade Surplus, the American Dream Not-Come-True, Falls to 9-Year Low, Total Trade Deficit Explodes to Worst Ever

The promise of high-value services exports to rationalize globalization turned out to be fake.

By Wolf Richter for WOLF STREET.

Back when globalization by Corporate America was still a good thing, anxieties about the ballooning trade deficit in goods were medicated away with promises that exports of services – such as software, movies, and Wall Street efforts to financialize everything – would boom and balance out the trade. We’d buy cheap goods made in other countries, and they’d buy our expensive services, and it would all balance out. That was the rationale. Few economic rationales have failed more spectacularly.

Promised export boom of services turned out to be fake.

The trade surplus in services is tiny, compared to the mega-trade deficit in goods, and it keeps shrinking. In March, according to the Commerce Department today, the trade surplus in services fell to $17.1 billion, the lowest since August 2012 (compared to the record $92 billion goods trade deficit, which we’ll get to in a moment):

Exports of services, the American dream not-come-true, edged up from the prior month to $57 billion in March, but were down 20% from March 2019. These “exported” services include spending by foreign tourists in the US on lodging and travel expenses, and spending by foreign students on tuition, room, and board. Both have taken a hit during the Pandemic.

Imports of services ticked up from the prior month to $40 billion in March, but were down 17% from March 2019. The difference between exports and imports is the swooning and minuscule trade surplus in services.

Goods trade deficit blows out.

The goods trade deficit in March worsened by 26% from March 2019, to a worst ever $92 billion, fired up by the worst ever imports that jumped by 9.7% from March 2019, to $234 billion, according to the Commerce Department today. Exports of goods ticked up 1.4% from March 2019, to $143 billion, roughly in the same range since 2014.

Services surplus v. goods deficit: both getting worse.

Juxtaposing the services surplus and the goods deficit on the same chart shows clearly what is going on: services surplus is small and has been shrinking since 2018 – the American dream not-come-true.

And the goods deficit is huge and has been getting worse, fired up by the stimulus payments that people spent on imported goods since most goods people can buy at many American retailers have been imported, or many of their components have been imported:

Total Goods-and-Services Trade Deficit.

The US trade deficit in goods and services, after going from record worst to record worst, worsened by 5.6% in March from February to a new worst-ever $74.5 billion, 52% worse than in March 2019:

Note that during the Financial Crisis, the overall trade deficit improved substantially. Consumers cut back buying imported durable goods, while the trade surplus of services declined only briefly.

The opposite happened during the Pandemic where stimulus fired up US consumer demand, boosted foreign manufacturing, but did nothing for US exports.

Imports are a negative in the GDP calculation; exports are a positive. And Q1 GDP took a major hit from the ballooning record trade deficit.

Every crisis in the US over the past two decades has caused Corporate America to cut costs further by pushing offshoring to the next level. And after each crisis subsides, the trade deficits and US dependence on foreign manufacturing plants (no matter who owns them) are worse than before.

This dependence has become painfully obvious in some of the shortages, including the semiconductor shortage now rippling through the US economy. The US, which for decades had led the world in semiconductor design and manufacturing, now makes only 12% of global semiconductors.

The government’s and the Fed’s response to the Pandemic was a combination of stimulus payments and money-printing on a scale never seen before. And these stimulus payments and the wealth effect triggered by money printing – the ballooning asset prices – caused consumers to buy more goods, and fancy goods too, and so they bought more durable goods than ever before, triggering this WTF spike in consumer spending on durable goods, a big portion of which are imported, or their components are imported, the drivers of the worst ever trade deficit:

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  261 comments for “Just Keeps Getting Worse: Services Trade Surplus, the American Dream Not-Come-True, Falls to 9-Year Low, Total Trade Deficit Explodes to Worst Ever

  1. Depth Charge says:

    The US was sold out to the “lowest” bidder by greedy corporations with the help of a complicit CONgress. Shameful.

    • K says:

      Amen. To be fair, the greedy, ultra-rich, American fools who gave the technology to China, trained them in how to operate high-technology factories, helped them set up entities that could compete with US companies, and funded them (at least initially) never imagined what would happen.

      Now, more and more high technology products are being made in China by CCP-controlled and owned factories. If we do not take drastic action, if we want to defend ourselves, we will have to either stockpile high-technology items or ask them for permission to defend ourselves, so they do not cut us off.

      The CCP now are basically Americans’ drug dealers: we are now dependent on them for their stuff. They can just threaten to withhold it and American companies will crawl.

      • a guy from Toronto says:

        I’m not from States, but I’m amazed how USA managed to shoot oneself in the foot.

        I think that many thesis will be written on this topic, looking at different political and economic aspects.

        Canada is arguably in even worse position, as today it is basically one trick pony with its real estate, but globalization system was created and promoted by US.

        • Jack says:


          Do a bit research on a past “ glorious “ Canadian company called Nortel( used to constitute %30 of the market cap of Canada’s stock market at one stage)!

          The Chinese then( tiny Hwa wei) stole their technology by reverse engineering it and selling it to the Chinese local market!!

          Gradually, that “ tiny Hwa wei Manager by hook and crook to surpass most western players in the G5 networks infrastructure tech, and are working ( have been) on G6 for a while now!!!

          Same goes for our beloved Google ( the do No evil guys you know) as they F)&&ed up big time in China and sold vast amounts of tech an algorithms to the communist brethren!!!!

          oh , and don’t forget Cisco , those court cases against them in the US, that point out to how clearly they aided and abetted the Chinese to curtail the “ human rights “ of their minorities .

          All the big Northern American corporations have to large extent, driven by short term profits over the strategic long term economic decisions to keep a company going forward have basically “ crapped their nests” and are now between a rock and a hard place.

          Either follow the CCP’s directives and hand over the technology, or be banned from , eh.. Eldorado??!!!

          There is only ONE WAY, to gradually reverse this fuck up.

          Invest in your “ human infrastructure “!

          No, Not the Biden way, by handing cash out to the people to burn it in the altar of Amazon.com !

          But by creating system of incentives and PUNISHMENTS for corporate America, to invest in America. Tech the kids to make and invent things.

          That is the human infrastructure that the country needs now.

          Apple, google, Cisco, intel be ON NOTICE.

        • Winston says:

          “I’m not from States, but I’m amazed how USA managed to shoot oneself in the foot.”

          The Soviet era Marxists weren’t wrong about everything, just most things. Here’s one of their very old adages that the Chinese have proved the truth of in spades: “A capitalist will sell you the rope you hang him with.”

          Except in this case he funds your rope factory, allows you to steal the IP, and BUYS the rope all the while foolishly hoping for a share of your potential 1.4 billion body consumer base when, in fact, he will be replaced with native industries using what they’ve learned from him and stolen IP.

          Only governments that aren’t BOUGHT can save a nation from the cause of that which is the short-sighted, quarter to quarter profit-only drive of multinational corporations with no allegiance to any nation or people. But BOTH major parties in the US are FULLY bought, so that didn’t happen.

        • Sierra7 says:

          Guy from Toronto:
          “….I’m amazed how USA managed to shoot oneself in the foot.”
          Truer words not spoken.
          And, the American people (sheeple) exalted when “globalization gained strength in the 1990’s.
          What makes this possible is narrow minded public thinking, almost no historical memory on how the American middle class came to fruition and keeping the public head in the sand.
          It will only get worse.
          The tsunami that is behind all of this is general automation of anything that doesn’t require tradescraft. And that will be somewhat overcome with module building for example. Imported from elsewhere and “assembled” in the US.
          Agriculture is another great example of how automation is and will continue to restrain those who wish to come to work in the fields that still require manual labor. Having spent many years in my early working days in row crop farming from the late 1940’s until tough economic times in the 1950’s forced me to abandon what I loved and seek employment elsewhere. The advancements in auto machinery to do huge amounts of earlier manual labor chores is amazing and will further put problems before the immigration policies.
          We are entering a global world with narrow minded solutions for the majority of US (and others around the world) workers, from manual laborers to the white collar jobs.

        • 91B20 1stCav (AUS) says:

          Sierra-your eloquence (“…a global world with narrow-minded solutions…”, indeed) never ceases to lift my day, even in the face of our observations that the global line is definitely trending towards heck…(or is it all simply entropy?).

          may we all find a better day.

        • NBay says:

          Winston- very well said re; ROPE…..And the Chinese weren’t making the chips I described below, but they do get Yin Yang….which is BALANCE.

          Damn, being at the front of these comments is weird!…not sure I like it at all….I may just go back to my usual behind stuff. PS, Dan I broke my promise and couldn’t resist an ad on….all meant in the good SPORTING attitude. My best was among top 50 in county in VB for a while, but you are way above that.
          Sorry for off topic.

        • w says:

          Actually,England is the Megaglobalist,u.s. Is just a colony like canada.

      • HK says:

        Don’t they own majority of the U.S. debt as well? This isn’t gonna end well. I think we should have an equal share with them when it comes to the advancement of tech. I hope intel will catch on to their level pretty quick before they take the entire world by storm… or perhaps this was by design.

      • NBay says:

        Just to add some Electronic Tech hands-on chip source date perspective, starting in ’85 I was breadboarding TTL (5v) transistors, resistors, and inductors/caps, at home for fun (and ckt learning) like op amps, 555 timers, the whole 7400 series, 8 and 16 pin chips, along with DIP switches, and inline and 7 segment LED chips, shift registers, &c. ;)

        I bought them sometimes at Radio Shack, in a pinch, but more often through the DigiKey catalog where they had all the latest stuff (like higher power stuff, like SCRs, triacs, etc) and were cheaper. Also went to electronic junkyards.

        Most all chips were black and said Malaysia on the back, even DIP switches and 7 segment and inline LED chips.

        One the other hand, at work our OCR had 4 Intel 25Mb RAM IIRC boards that cost IIRC almost $10K, $5K for sure, and this would be ’85-86 or so, also.

        They were gone within a few years, and I forgot what replaced them, but it was WAY more RAM, for sure. Eventually held the entire National Directory for the P/O…..everybody’s address.

        Also for what it’s worth, when I took Auto Shop (I got ASE cert Auto Electric and BAR Smog L-1 and L-2 cert) in ’10-’13, a LOT of car stuff still used TTL (5v) and +/- 12V stuff….12v batt was main reason.
        But if one isn’t current in this game, you are a dinosaur….so like I said, for what it’s worth.

        • NBay says:

          Forgot, some said Taiwan, but NO China….at least not back then.

        • NBay says:

          Sorry, there may have been some China, but I don’t remember well. Just didn’t want to screw up dating chips thing……

      • Marcus says:

        I totally agree!

      • Robert C Lang IV says:

        The CCP are Americans’ drug dealers in more ways than just technology. They are providing the chemicals necessary for Mexican cartels to manufacture illicit drugs as well as providing already made illicit drugs for the cartels to sell in the United States. It is a low tech way to wage war on us.

      • bb says:

        Must reply to K:You areNaive!,1963 Rockefeller plan includes most of what has already happened with the tech+biz trsnsfer,building up the Chinese economy,hollowing out of American cities and raw resources.This country,like many others,has been intentionally and systematically Plundered! They education system/indoctrination machine/babysitter has done its job in creating hierarchies within society of the connected,advantaged people,especially men and then the sheeple who are finally realizing how horribly Rigged everything is.Stop buying unnecessary items like hot tubs and fancy,imported countertops,the newest Shiny or whatever.

    • True dat says:

      True dat… An the sheep voted for it.

      • 91B20 1stCav (AUS) says:

        True-but, but, Americans are the ‘exceptional’ people, how could this possibly be happening???

        may we all find a better day.

        • NBay says:

          Ha-Ha…..VERY good one.

          Evidently it’s the “around 1/2 of us are exceptional” divisive game that’s played here, and played very well by the “vote masters”.

    • Lloyd Frazier says:

      It has been done by Democrates. The Republicans have little control due to tthe eletion.

      I’m not saying Repubicans would have help stop it but I thhink so.

      It is nowhere clear that Republicans had much to do with it

      • MarMar says:

        This has been a bipartisan project spanning decades.

      • MCH says:

        So, George Bush Sr and Jr weren’t Republicans? The dumbos didn’t have control of one or both houses during the last 30 years at various points in time. Let’s not kid ourselves. As much as I can’t stand the jackasses, the dumbos are equally culpable in the screwing of the country.

      • phoenix says:

        lmao yep because this is something that happened within the past year. This site might have the widest variance i’ve ever seen in comment quality. Some absolute gems mixed with breitbart tier garbage like this one. I can just picture the old geezer typing this out using one finger

      • NBay says:

        Yeah. Why can’t we all see the truth and become all Citizens United?

    • 2banana says:

      America did mucho damage to themselves.

      Highest corporate tax rates in the developed world.

      Insane regulations where you need armies of overhead just to not be bullied.

      Half the states with closed union shops and crazy work rules. I used to work in them.

      Diversity and hiring quotas. No way to fire poor performers.

      Environmental wackos that delay every investment.

      At some point you just give up.

      Just today I read. A $1.5 billion steel plant in Pittsburgh canceled.

      “Over the past two years we have carried the all down the field as far as possible without the issuance of the permits necessary to begin construction, which we applied for when we announced the project, ten months prior to the onset of COVID-19.”

      “According to the organization, 1,000 construction jobs will be lost due to canceled plans for a $1.5 billion rolling mill and co-generation plat at Mon Valley Works.

      They also believe that the move signals a dimished future for steelmaking in the region.”

      Source: KDKA-AM Radio Pittsburgh. April 20, 2021

      • timbers says:

        Highest corporate taxes? Did you mean lowest? I believe the offshore rates are near 0%.

        • 2banana says:

          Well, at least you are starting to get it.

          Yep – that is what happens to places with high tax rates. Money doesn’t go there. But money does leave.

          NYC will soon have a combined state/local income tax of near 15%.

          Florida and Texas (and other places) still have 0%.

          Guess which way the money and people are moving?

        • rhodium says:

          Right now that’s what’s preventing inflation. It’s a good thing as long as all that money stays sequestered.

        • w says:

          Exactly!!Me thinks he is p.r. For corp. Crybaby!Theoretically,the corp. Taxes may seem high,but Reality is that W.Buffett,apparently pays a lower rate than his sectretary while Bezos gets hand over fist tax breaks to bring his slavelike ops to podunk,u.s.a.Sports franchises have a Long history ofYuge taxbreaks or freepasses.How much$ does the co. CEO and the shareholders need to extract from the citizens?? Regarding envirolaws,there should be reasonable laws restricting biz ability to poison,retard,and disable its neighbors.This country has serious pollution problems and as a gardener,walker,outdoors-oriented human,it is very difficult most of the time to do a simple enhoyable outdoors thing like bike to the store,especially on hot humid days,=particulate matter goes straight to the lungs and brain=disease. Quarantine has been good for me in that its much quieter and the air is actually breathable.

      • timbers says:

        In other words, it’s because America has the lowest corporate tax rates that is destroying this nation. Welfare for the rich is fueling buybacks, Itel, loss of jobs, productivity, etc.

      • Anthony A. says:

        We lost the steel industry in the country in the 1960’s. Armco, Bethlehem, U.S. Steel, etc., all shut down due to not upgrading their hot mills and then the import of cheap Japanese steel in the 1970’s killed what was left. I worked in it and also ran a warehouse that stored Japanese steel in coil in Detroit in 1976.

        At that time, my father-in-law ran the 11 stand tandem hot mill in Buffalo, NY at Bethlehem steel. It was the largest hot mill in the U.S. at the time. Gone in the early 1980’s.

        What’s left in this country are small producers like Lukens, Nucor, Steel Dynamics, and others, plus a smattering of small finishing mills.

        • 2banana says:

          There are a lot of sides to the equation.

          Every country rising out of the carnage of WWII wanted to make steel (and build ships) and was willing to heavily subsidize and build the industry. And billions were still being invested into steel mills in America despite the popular myths – but they still needed to make an unsubsidized profit.

          When the Word Trade Centers decided to use imported Japanese steel over steel made less 100 miles away in Bethlehem, PA, you knew the game was over.

          Insane work rules and insaner unions (at some locations) made for very unproductive mills.

          Specialty mills and high end mills that were hard to duplicate overseas and were still very profitable.

        • VintageVNvet says:

          The SS finishing mill ThyssenKrupp built just north of Mobile, AL in the late oughts might be considered small, but at $4BBs for the metal works itself, plus another couple hundred MMs of public investment for the extensive infrastructure needed for support of that mill seemed to me to be rather large AA.
          Other than that, yes, the steel industry and the aluminum industry have both been driven from USA by more and more red tape, some good in the sense of safety, clean air, etc., some bad in the sense of NIMBY because America, eh?
          Similarly the hundreds, perhaps thousands of smaller petroleum refineries and local power generation facilities and smaller local manufacturers, and smaller local farmers,,, etc.

        • NBay says:

          Lot of industrial cap-ex blown all to hell or left in Vietnam, plus all the massive support stuff, and lotsa dead kids and Vietnamese. I often hear 2/3 of WW2 in today’s dollars, and wouldn’t doubt it, but we’ll never know.

      • BigBird says:

        Let’s take a closer look at that list:

        1) Taxation
        German corporate tax rate: 30%
        US corporate tax rate: 21%

        2) Labor unions
        German labor union membership rate: 19%
        US labor union membership rate: 10.8%
        Furthermore, Germany has mandatory workers’ councils for large companies, where workers get 1/3 of the board seats for the company.

        3) Regulations
        US “regulations” for consumer protection, environmental protection, product standards, or whatever else you want to name would be considered a joke by any German.

        And yet:
        German 2020 trade SURPLUS: €179 billion ($215 billion)

        Germany was also rated the most competitive industrial nation in the world in 2020, again…

        Conclusion: I’m guessing your list of complaints is not relevant to the matter at hand.

        • Dano says:

          Germans have a homogeneous work attitude. That cannot be said for US union members.

          Germany also exports much thru the EU market to countries that don’t have the workers with attitude or discipline to make the kind of precision machine tools Germany is well known for.

      • kam says:

        STEEL. The Chinese Communist tool to knee-cap the USA and the Western World. Dirty coal, no scrubbers, nothing. Pretending that in 2030 they will think about changing their ways. Deceit, always at the ready.
        So I go to buy 300 feet of Wire Rope. I can buy Made-in-China or Made-in-Mexico (from Chinese wire) or from 1 manufacturer left in the USA (owned in Europe).
        The Chinese Trojan Horse has infiltrated everywhere.

        • 91B20 1stCav (AUS) says:

          kam-have always felt the REAL tariff opportunity was decades ago when the U.S. could have withheld Free-Trade status from countries whose products they wished to export here did not meet the same, and verifiable, regulatory/environmental standards that our own domestic industries had to meet.

          Industry AND Environmentalists would have screamed at the time. Industry, which could have been given a gradually-improving, and therefore worldwide technical lead in ‘clean’ manufacturing, would balk at the cost/inconvenience of any regs. Environmentalists because they wanted things fixed RIGHT NOW, giving little consideration as to how much the nation relied on its contemporary technoindustrial operating systems. Instead, it was much easier (and more profitable for many) just to offshore industry and its associated pollutions. A short-term win-win whose long-term effects appear to have gone lose-lose as we so interestingly discuss these days in Wolf’s most-excellent sandbox.

          and, as that raft goes further downriver,

          may we all find a better day.

        • NBay says:


          Don’t forget RELENTLESS advertising for ever more dubious “NEEDS” using ever more dubious content. The old man hated the TV and called it the Mahogany Shrine. We had to finally badger him into getting one when the Micky Mouse Club came on as we went to other kids homes, a must see for kids, and out after dark in winter.

          They never did figure out how to monetize dirt clod wars, though, our favorite pastime.

        • 91B20 1stCav (AUS) says:

          NBay-sadly, it’s been a while since i’ve seen a ‘Kill Your Television’ bumper sticker…

          may we all find a better day.

    • intosh says:

      The robber barons of the 21st century.

      • max says:

        there can not be robber barons without robber politicians.

        Mark Twain:
        There is no distinctly American criminal class – except Congress.

        • intosh says:

          Robber barons put robber politicians in power.

          You prefer we go back to the Wild West “system”?

        • NBay says:

          No Indians left to kill and take “unowned” land from, so Wild West is out, although the homeless try their best.

    • max says:

      oh my god, greedy corporations and not greedy people.

      american people vote for people who promise free goodies, from cradle to grave security, wage forever wars, and then they blame foreigners.

      • NBay says:

        Massive Green New Industry with Educational Support Program……also Constitutional max net wealth…..$10-$15M is plenty incentive, plus job creator statues, and park anywhere vanity plates. They like prestige and command, so many will stay at it. Buffet lives ONLY for it, for example.

    • K says:

      On the other hand, this has led to reform. The current US trend to massively increase taxes upon the ultra-rich on their death, including estate and capital gains taxes, has a definitely positive side:

      Dear banksters,

      I have always believed in freedom of choice. States should allow you to do what you want to do.

      I will not tell you what to do but think about how many millions you could save if you just act now. Listen to the song from the original MASH TV series. Is it not alluring? Tempus Fugit, Memento Mori!

      Again, since we all know that money is the most important thing for you, think about how much your family will save and do the right thing for them and for all Americans. We will all thank you! I will put flowers even if you get planted nearby and it is convenient. LOL

      • K says:

        P.S. the ginormous, US estate tax credit means that currently, poorer Americans do not have to worry about estate taxes contrary to the claims of those in the media who are desperately trying to oppose any attempt to force their billionaire owners to pay taxes. See Forbes Magazine’s story as to how 15 billionaires own US media.

        However, you ultra-rich banksters can save a lot of money for your families right now by quick action. Think about it. We would all really appreciate it. LOL.

    • Mira says:

      And so was Australia
      PM Keating told us that manufacturing was too expensive in AU .. that we were now going into the service industry ..
      [we were way to intelligent to be factory workers]
      .. then we started getting telemarketing & calls from India X 10 call per day.
      We rang India to enquire & complain ..
      We were lied to man.

  2. Depth Charge says:

    Since bad news is now good news – ANY news is good news – the DOW has now come roaring back even after Janet Felon mentioned that the FED may have to start raising. These clowns know what they’ve caused.

    • Swamp Creature says:

      I can see companies putting their employe’s salaries on the Internet and requesting bids from all over the world from employment service companies on replacement workers who will take their jobs. Auctioning off their jobs to the lowest bidder who then gets the jobs. Domestic employee get fired or are forced to take a pay cut to the lowest bidder’s price. CEO’s get a bonus for cost cutting. This has already happened in some industries here including one I was involved with, so don’t say it can’t happen. Get ready.

      • Trucker guy says:

        It’ll be put on americans either way you flip the coin. Work a full time job and not be able to afford anything, or worse yet, put it all on monthly debt financing and then have the boat start sinking and end up stranded at sea.

        Of course they’ll say we need h1b visas for foreigners to do jobs americans refuse to do and pay them peanuts and stack them into hovels that corporate america owns. I’ve seen it in trucking. Deregulation hit, industry goes down the toilet, americans leave it behind because it’s legalized what used to be criminal behavior, govt steps in with regulations targeting the workers and small guys at the behest of lobbying firms, read:megacorps; and suddenly you have 3 russians or arabs living out of 1 truck that never stops moving for slave wages and no rights and suddenly the government needs to she’ll out billions to mega carriers because of the “driver shortage.”

        • H-1B Angel Donors says:

          “Of course they’ll say we need h1b visas for foreigners to do jobs Americans refuse to do and pay them peanuts…I’ve seen it in trucking.”

          H-1B program applies only to specialty occupations, not trucking. Specialty occupation require highly specialized knowledge and the attainment of at least a bachelor’s degree. If republican politicians keep defunding local educational institutions and spend less and lesser on training teachers, you are eventually left with less number of qualified domestic workers to fulfill the needs of specialty occupations.

          Further, you need to be thankful to H-1B workers, simply because Uncle Sam deducts social security taxes and medicare taxes from their payroll, even though they never get to enjoy the benefits of them in their lifetime. H-1B workers are essentially making donations to Americans’ welfare with every paycheck!

        • Felix_47 says:

          I was a Teamster in the 1960s!! Back in the day nothing moved in the US if there was a Teamster strike. No one would ever cross a picket line. Where was the Union when the Democrats push for more immigration? Why is the Union so weak? Why are driver salaries so low in comparison to my salary 60 years ago? If there is one thing the Union screwed up on it was backing politicians that opened the Southern Border to everyone. What were they thinking? Why did the Teamsters not demand that they be allowed to organize Mexican drivers if we had NAFTA. Why? Even now Joe Biden was not elected by much of a margin. Why do the Unions tolerate this suicidal behavior. Maybe I am the only old guy who reads Wolf but in the 60s when there was a national walkout be it UAW, Teamsters, Laborers whatever if someone crossed a picket line they would …… no one would dare. If the laborers struck a building site the builder would see no deliveries ever. I see Amazon……dependent on trucks…….they are trying to organize a Union. And trucks are delivering? R U Kidding!! In the day Amazon would be shut down nationwide. When there was a major walkout in the day the president would have to get involved. Does anyone remember those days or are we just another second world country heading to the third world?

        • timbers says:

          And forget the non H1 B, non specialist, cheap foreign labor pouring in by the millions every year. You don’t need to be H1 B to drive down wages.

        • MCH says:

          jeez, what are you guys? A basket of deplorable attacking immigrants who are trying to feed their families?

          Yes, H1B like their illegal counterparts crossing the border are immigrants, how dare you all attack corporate America for giving opportunities to immigrants.

          That’s just unAmerican. Get CNN in here and have them cancel y’all. This is just one step away from being R*****.


        • NBay says:

          The market clearing price of labor used to be slavery. Now it’s even lower…..Independent Contractors….piece work…..you don’t have to feed and house them like they did the original slaves….

      • Reverse Globalization says:

        “Auctioning off their jobs to the lowest bidder who then gets the jobs.”

        I wouldn’t mind your proposal, if the lowest bidder is equally skilled or greater than what’s available locally. Every time, I use medical services in this country, the hole in my wallet gets bigger and bigger. International telehealth visits may help with tamping down the medical costs.

        You get better at what you do or loose out to competition. Isn’t that capitalism?

        • Felix_47 says:

          An Indian doctor talking to me from Calcutta vs. an Indian doctor talking to me from San Francisco. What is the difference…..I can’t understand either accent very well. Both of them think I am a stupid American and just talk louder and faster.

        • psha says:

          Too bad it’s not the healthcare industry that they outsourcing.

        • Artem says:

          Money doesn’t buy good behavior. Health and education are very behavioral–if you want to rot your brain with social media, fast food and candy, vape and not brush your teeth, then obese, dumb and sick is what you are going to get.

          No matter how much money you spend later trying to undo the damage.

        • Swamp Creature says:

          Reverse Globalization

          Lenders tried to save money by outsourcing RE Appraisal reviews to India. They took the work that we spent 20 hours doing and sent it via broadband overseas to some dude working for a firm in India, lowest bidder, who knew nothing about the Real Estate market here in the Swamp. They had an incentive to find errors to justify their existence. They sent their audit back to the Lender here in the USA who then contacted us to make the corrections. A total waste of time. This is what you get when you outsource a quality control function overseas to the lowest bidder just to save a buck. You can have it.

      • cas127 says:

        Well, in the end, unless the US can find a way to be more productive than other countries in the world, it is destined to fail regardless of any political stopgaps that DC can cough up.

        Now, the initial transition to Chinese productive superiority was handled with gross incompetence back in 2002-4…DC had plenty of foreign currency manipulation laws on the books that could have made Chinese ascent much more gradual.

        But DC chose to stick its head in the ground.

        And China domestically manipulated its currency in such a way as to subvert trade surplus recycling and therefore supercharge its domestic production and exports to the US.

        But, in the long run, the US is going to have to learn how to compete again, regardless.

        Tariffs and the like can buy time…but they can also become cozy hammocks for failed US manufacturers to recline in (forever).

        That outcome won’t serve the US either…we’ll have factories…but third rate factories subsidized by tariffs…while other countries of the world benefit from less expensive Chinese exports.

        DC did foster this intl trade chaos but in the end there is simply nothing that beats productive efficiency…unless the US can re-obtain those heights…it is destined to lose.

        • Felix_47 says:

          China spends 500 dollars per year per capita on medical care. The US spends 11,000. The US spends 20,000 per year on public school per capita with terrible results. Just imagine what a Honduran mother of four costs the public and why would anyone not show up at the border with that sort of government subsidy. Those costs go into the national efficiency budget. The military costs go into the national efficiency budget. The unemployed. The teenage moms with two kids. The gang bangers etc. With better management the US could compete very well. We are blessed with a relatively low population, relatively mild climate and natural resources. It is a management issue. Don’t forget half the people of China, just like the US, have an IQ less than 100. The problem is management plain and simple. Campaign finance reform would buy us many years of prosperity.

        • Auldyin says:

          Spot on for the early days. The Renminbi should have gone through the roof with these early trade surpluses but it didn’t because they re-cycled the money back via the Capital Account. US was glad to get the money but they consumed it and didn’t invest it other than F35s, wars, etc.
          It’s not that way now, Asia is a technological powerhouse, ages ahead of everybody else in almost everything, and they are beginning to be hesitant about recycling into dollars as well.

        • kam says:

          Productivity dies on the alter of Regulation.
          Try building a “Chinese-standard” Steel mill in the USA.

        • NBay says:

          BC is sitting on a huge rain forest of timber and they highly regulate it. Logging for “pecker poles” seems a waste, unless you run a portable mill show for people building homes with timber cleared from around the homesite.
          I was raised in logging country, first job out of HS was setting chokers for a gypo logging outfit. 5 mills closed during the time I was there. Many friends went north, OR, then BC, and I’ve been up there a lot.
          But as I said before, you aren’t producing “reservations”, so credits for that. I think we could build clean steel mills, if the money went into it like it does “Alexa”. Who needs that junk.

      • Ron of Ohio says:

        I think the “work from home” movement is just the next step. Now that they know an engineer can “work from home”, then they will figure out an engineer can work “off shore” and all of a sudden the white collar jobs have gone the same way as the blue collar jobs. Detroit was the “best place to live” in the 1950’s. Now look at it. That will be our future unless we decouple from the direction politicians and big business is pushing us.

        • Ensign_Nemo says:

          Yes. Once they end the last of the lockdowns and all the workers return to the workplace, the next step will be to split the work into two categories. Work that must be done on location will be kept in the country. Everything else except the jobs of the upper managers will be offshored.

          The ironic part of this is that the few workers who remain on-site will be worked like dogs. We will have a huge population that is unemployed or working at nonproductive jobs, and a tiny sliver of workers who will be so damn busy that they will have no energy left for anything else in their lives when they finally end their workday.

          It will be much like Japan is today, where people with productive jobs are literally too tired to start families or have children. The major difference is that the unemployed in the US will have all the time in the world to make babies, so the consumers will massively outbreed the producers.

        • 91B20 1stCav (AUS) says:

          Ensign-you might enjoy reading C.M. Kornbluth’s classic sci-fi short story: ‘The Marching Morons’, predating this now by several decades…

          may we all find a better day.

      • Mira says:

        This did not occur to me .. well done Sherlock !!

        • Mira says:

          Only some jobs though .. they cannot afford to lose control of the joystick.
          However .. they might just be that stupid.

        • Mira says:

          If .. “THEY” .. were to dole our a merger income across the board .. so as to keep the current economic system going .. the House Casino open.
          And a separate economic system for the billionaires to thrive in .. the Global Casino operative.
          & I’m not even sure I know what I am talking about yet.

      • w says:

        Where ya been,this IS reality for many Americans.This is the fantasy of countryless Megacorp-degrade,divide and conquer,and make em grovel for slave wages with 0 ,job security.Offload as much risk to gig workers,subs,etc. Scoop up beaucoup bucks.

    • timbers says:

      I’m sure Janet also meant to add that if sometime in the next million years they raise rate to a bone crushing 0.25 – 0.50%, the Fed will need to double or triple it’s monthly QE to make sure no trillionaire losses even so much as a penny.

      • Bruce George Adlam says:

        How bad does things have to get before the average American revolts against the Fed every day they are being screwed by the Fed and QE

        • Rumpled Bemused says:

          The average American hasn’t complained because most are in debt, and they have been allowed to be childishly self indulgent. The moment their credit isn’t extended is when the crying will begin.

        • Nacho Libre says:

          2020 was the biggest human experiment, way larger than MKUltra.

          Results are out. No revolution as long as TV is on and checks keep coming in the mailbox.

        • Escierto says:

          Americans are morons who know nothing about the Fed. QE could be a video game for all they know. I think Americans are getting exactly what they deserve. Good and hard as Mencken used to say.

        • SuzeB says:

          In my opinion, the average American doesn’t even know what the Fed is. Recently I asked my 65 y.o. sister, a world traveler with above average smarts: “Do you know what The Fed is?” She paused a few moments and then she said: “Umm. I think I know what it is but actually, I’m not really sure”.

          There you have it!

        • MCH says:

          At SuzeB, and for that we have to thank our educational system.

          Great job, grade school teachers. Excellent work, university professors, glad to see you have all done such an upstanding job of teacher people to be anti-r****.

      • Nacho Libre says:

        All those millions in ‘speaker fee’ come with strings attached.

        Strings are being pulled now.

        What a lucrative hustle.

        • NBay says:

          Yeah, like Bernie told Hillary, “At $275K each they must have been Shakespearean. Surely you would want to share a few”

      • Delikon Threetree says:

        I saw an article today that a lot of wealthy people are moving from mutual funds into ETFs in droves because of Biden’s proposed taxes on investment income.

    • Phoneix_Ikki says:

      The world we live today would make Bizarro Superman mightly proud. Down is up, Up is down with none of the nonsense coming to a halt anytime soon. Good times yall!

    • Anthony A. says:

      Looks like Janet Felon saved the day….DOW finished in the green after being down 300 points today. There must be a big sigh of relief on Capital Hill. Now on to more upside!

  3. Tim says:

    I understand the trade surplus figures but I’m not sure what the solution should be (if a solution is really needed). Should we place tariffs on foreign goods that are high enough that it becomes economical to make many of these goods here? That just seems to start a trade war where no one benefits.

    To me, this is just a period of time we have to slog through that will resolve over time as workers in other countries will eventually demand more wages (and perhaps transportation costs rise). We can work through the WTO to make sure that foreign manufacturers aren’t being subsidized by their governments and that they have to abide by agreed upon environmental and labor standards to level the playing field, but beyond that it’s just competition.

    What else can we do?

    • ru82 says:

      It is fine to make cheap goods that require cheap labor elsewhere. But now it is almost everything is built elsewhere?

      • MiTurn says:

        ‘Few economic rationales have failed more spectacularly.’

        This is all madness and it is going to end in very predictable ways. The US dollar will go kaput and we’re going to make the worst sort of history.

      • MiTurn says:

        Today I went shopping. At NAPA I bought some replacement auto parts — all made in China. And at the local saw shop I bought a replacement chain for my chainsaw — made in Switzerland. US-made equivalents not available.

        We’ve done this to ourselves.

        • kam says:

          “We’ve done this to ourselves.”
          No. You never come close to the levers of power that killed the American Middle Class and their families.
          Your owners did this, not you.

        • Anthony A. says:

          I just bought a Hengst German brand oil filter for our VW. The box says made in Germany. The filter inside is stamped “Made in China”. Gotta love this…..

        • NBay says:

          Yeah, probably still roughly based on the famous versatile “Oregon Chipper Chain”, the first really good all purpose chain design. Although there is a ton of special purpose variations out since then.
          It was usually found on a Homelite Whiz, although my Canadian pals now call them, home-at-nights, as in need work. Husky ruled last time I was up there, down here it was Husky and Stihl when my saw days ended with trashed back in ’14.

    • SpencerG says:

      By and large we have to wait… the current spending spree will probably end up being cotton candy for those nations that are currently benefiting.

      But there are some things that we can do. First off is to bring back critical industries to our own shores. The COVID-19 pandemic has revealed that most of our pharmaceuticals are made not only in nations where the FDA cannot continuously monitor production… but nations (or ONE nation– China) that threatened to stop shipments of pharmaceuticals if we continued to criticize them. EITHER of those reasons is good enough to bring that industry back to America. Same goes for Rare Earth Metals and other strategic products. At the very least we need to be providing for a good 20% of these products ourselves so that we can ramp up production when necessary.

      Another thing that we should be doing is favoring production in countries that are not using our purchases to fund an adversarial relationship with us. Every manufacturing plant that went from Mexico or Central America to China simply because labor costs were lower there is not only creating a crisis on our own border due to increased unemployment, it is funding an expansion of China’s military. Not all of that production can be brought back to the Americas… but where it can be… it should be. India, Vietnam, the Philippines, South Korea… all excellent locations for our manufacturers to move to if they don’t want to Habla Espanol.

      • Tim says:

        I agree with all of your points and they should be done. However, and I think you know this, that’s is more of a strategic issue than trying to focus solely on reducing the trade deficit just because we think that’s a good idea.

        • SpencerG says:

          Yes… I agree. There are some things we should be doing strategically to make sure we aren’t helped hostage either economically or militarily. And they aren’t that difficult to do (even if they don’t necessarily mean that the production comes back to America… but might instead simply go to a less adversarial nation than China).

          But the overall outflow of jobs from America is simply because we were the only large manufacturer left after WWII so we had most of the jobs and they paid fairly high wages. That was NEVER going to last. First came the Cold War where we deliberately sent jobs overseas to nations that we wanted to rebuild… Japan, Germany, South Korea, Singapore and other strategically located countries benefited the most. That lasted almost 50 years.

          Following the Cold War we focused a bit on our own neighborhood. NAFTA (1994) is the best example of that. Unfortunately it only last about a decade… which was a major mistake… CAFTA was passed in 2005 but by then we had already opened the floodgates to China.

          Letting China into the WTO meant that not only were they grabbing production from America, they were grabbing it from LATIN AMERICA as well. Their labor costs were just that much lower. Stricter enforcement at the border along with a “Great Recession” limited the surge of illegal aliens into America… but only for a bit… as can now be seen on the nightly news. We should have spent a couple of decades building those nations to our south up.

          The biggest problem with China was that it was so big it didn’t have to play by the rules once it got inside the tent. All of our other trading partners had to be aware that what America giveth… America could taketh away.

          And let’s be candid… China has simply been smarter about trade than American politicians, economists. and business leaders have been. They NEVER intended to abide by the WTO rules.

          One example: forget enforcing intellectual property rights… China has forced businesses to give up their intellectual property just to gain access to their markets. They get away with it because they promise that they won’t use that knowledge for fifteen years against the companies they take it from. Which seems to work out for the CEOs that sign the deals… they only have a term of office of five years on average… so they will be long gone before the bad parts of the deal hit and their companies are competing with Chinese companies using their own intellectual property.

          In fact you can look at what the CEOs of America started saying in the runup to the 2016 elections which were exactly 15 years after China got permanent “Most Favored Nation” trading status with us. It is a lot different than what business execs were saying over the previous fifteen years… because THEY are having to live with the new competition due to those earlier deals.

          The one part where the Chinese have not played it smart is by rubbing everyone’s noses in it. They are getting way out over their skies with their military buildup. Right now the American reaction is to simply counter them in the Diplomatic and Military spheres… but as Trump (and now Biden) have shown… that bleeds pretty quickly over into the Economic sphere as well.

        • VintageVNvet says:

          Actually for Tim and SG:
          Not seeing the main difficulty of reining in China: IIRC, various politicians have been shown clearly, for decades and continuing, to have received many millions from CCP in the form of ”speaking fees”,,, election contributions, ”management fees,,, etc., etc.
          IMO, that’s exactly why the transfer of intellectual properties and the physical machinery to China has been so smoothly accomplished, and will be so difficult to recover, if ever.
          Lived in a small town in ”flyover” from where ALL the manufacturing machinery in a 20 acre building/factory was unbolted from its moorings, dis assembled, packed up and shipped to China where it was re installed and went right back to work fabricating the exact same products,,, and, yes indeed, some of the local millwrights went with the machinery to make sure it worked.
          3,000 peons out of work out of a county of 30,000!
          Not exactly something new, as the same happened in 50-60 years ago when a politician decided it was OK to ship logs — instead of lumber — from the US National Forests directly overseas causing the lumber mills in the Pacific NW area to be decimated.

      • NBay says:

        Our pharmaceutical-medical-managed health care-insurance complex is mostly SNAKE OIL and TOTALLY out of control. Especially OTC meds. We have a few real winners but not many. Erlich’s “magic bullets” are very rare and almost nothing beats diet and exercise, and the luck of the genetic draw.

        I quit Pharmacy School at Oregon State ’78-79 after the first year when I saw the writing on the wall. And it cost me a 5′ 10 1/2″ ex model fiancé that I cried and drank about for a long time, so it was a tough decision to make.

        • NBay says:

          And to those that think that’s all BS, well, just tell me to try some Prevagen and some Ageless Male or one of those other fine (maybe TV only) products…or something out of your health magazines…..or take a cruise, and I should be fine in no time.

      • Mira says:

        Little Scottie Morrison is in trouble in AU due to COVID & his slimy demean .. so he attacks [Australia’s arch enemy] China .. via mainstream media for all us Aussies to witness .. to redeem his image & standing .. this tactic is a regular ‘ploy’ employed to win us back & he believes it to have worked ,, yet again.
        Poor fool him.

    • Tronald Dump says:

      Bring manufacturing back home

      • Brinda says:

        Maybe you should have been supporting the last guy’s efforts at doing that instead of mocking him.

        • Lisa says:

          Trump didn’t believe in made in America. His daughter with the giant teeth had her products made in sweatshops overseas

        • NBay says:

          Yeah. I think he had 4th Reich or maybe a Monarchy in “mind”, such as it was. Had a great Prince and Princess ready to go, though. Very regal looking.

    • Patriot says:

      We are the US. We can do anything as long as we have the will power.

      We should just make the workers the only legal shareholders and make the C level positions ones that require shareholder approval. You’ll never see an over paid CEO or offshoring again.

    • cas127 says:

      Well, increase US productivity.

      DC can provide tools that will slow down wildfire international trade dislocations.

      But in the end, there is simply no substitute for superior productive efficiency…in the long run, tariffs can stop being about periods of adjustment and become palisades for inefficient producers to profit behind.

      But the US’ understanding of world trade/the WTO could be and must be vastly improved – it was the WTO-allowed Chinese currency manipulation domestically that allowed China to subvert intl trade surplus recycling and super-charge the growth of its domestic export sector.

      And China is still doing so. And the WTO is still impotent to stop it.

      But the West can put a stop to *that* if nothing else.

      The great tragedy is that DC couldn’t be bothered to do so for the last 20 yrs.

      • kam says:

        So your future and your children’s future depends on a decent, honest America First politician to create the conditions for American jobs making American products to be consumed by the Americans that have those jobs.

        Hmmm……sounds too practical, too straight forward.

        • NBay says:

          You aren’t the first to go there Kam. It’s a debate as old as civilization…as in Plato’s “Philosopher King”. We just had far from it, I think we were headed 4th Reich. But I also think democracy is still worth the effort, just have to undo a lot of bad law, ban lobbyists, and set a new national direction based on being on a ball in space.
          Tall order, I know, and we may still “go to heck”………

        • Mira says:

          It will never happen .. like our polies Ur’s want to be equal to & loved by their peers & they will do anything to be at that place.

        • NBay says:

          See, Mira, that’s why when I recommend Wolf Street to friends they say it’s all gloom and doom. It’s like one book reviewer said about “Cat’s Cradle”. “Great read, but you better be loose about it or you will break down crying and shoot yourself”.
          Highly exaggerated comparison, I know, but “Keep the Faith” still applies. Nothing goes to heck in a straight line, so we still have time to “get it right”…..somehow.

    • gl says:

      Well, we can start by ending free everything to potential new voters! Maybe we wouldn’t drive corporations overseas to avoid the taxes required to pay for these new “conflict of interest” voters that cancel out productive citizens vote!

      Not expecting that to happen in my lifetime.

      • Heinz says:

        “Well, we can start by ending free everything to potential new voters!”

        That will be hard to do now that authorities have opened Pandora’s box and embraced MMT in actual practice. Current admin seems determined to engage in a no-holds barred radical fiscal experiment.

        “Gimme my stimmee” (or alternatively: permanent unemployment bennies, subsidized college tuition, free health care and child care, perpetual mortgage and rent assistance, etc) seem to be the rallying cry these days.

        • MiTurn says:


          You nailed it. Why work? If the government can simply print money and distribute it freely to the unemployed (and those able but unwilling to work), then what’s the problem? Send me my money!

          Not having to earn one’s own living (that is, to work for one’s income) is becoming normalized as a social value and, soon, as a human right.

    • Wishful future think says:

      Tim, there’s an endless supply of cheaper labor / hungrier countries so your “just a period of time” can seem forever.

      Yes, standard of living has gone up in other parts of the world while ours decline but how low, how long, are you willing to take? International organizations are slow, ineffective, and conflicted.

      Best to go cold turkey on this addiction.

    • Auldyin says:

      The only way out is to export more than you import like the Chinese do. Which means you need to make products that people want to buy at prices they can afford to pay, ditto for services. There’s no way round it in spite of what politicians may tell you.
      Your main product is dollars and that’s why you can run these deficits.

    • max says:

      “Nothing, however, can be more absurd than this whole doctrine of the balance of trade.”
      —Adam Smith

      Thomas Sowell:
      international trade is not a zero-sum contest. Both sides must gain or it would make no sense to continue trading. Nor is it necessary for experts or government officials to determine whether both sides are gaining. Most international trade, like most domestic trade, is done by millions of individuals, each of whom can determine whether the item purchased is worth what it cost and is preferable to what is available from others.

      If the goods and services available to the American people are greater as a result of international trade, then Americans are wealthier, not poorer, regardless of whether there is a “deficit” or a “surplus” in the international balance of trade.

      The late, distinguished economist Herbert Stein and a fellow economist co-author put it best: “If all transactions are accounted for, there can be no deficit in the balance of payments.” Money does not disappear into thin air, nor do foreign recipients of American dollars let the money sit idle.

      To solve the situation we need a hard money system.

      • jm says:

        This depends on honest accounting for costs, which is what we don’t have, due to exchange rate manipulation, at which China is world champion. Fraudulent cost accounting through exchange rate manipulation makes “comparative advantage” appear to exist where it does not, causing misallocation of resources from their optimal use.

    • Paulo says:

      Tariffs? Like the 27% on BC softwood lumber? Will that make anymore trees grow down under?

      • NBay says:

        Absolutely right. BC is sitting on a HUGE rain forest of big timber and the industry is highly regulated. Cheap lumber done right for until we realize we are on a ball in space we can’t grow forever, hopefully.

    • Retired Beancounter says:

      About 15 years ago The Economist wrote that a nation with a chronic trade deficit would ultimately have a lower and lower standard of living until the trade balance became neutral. Sounds rational to me.

  4. David Calder says:

    It seems as if China and other exporting nations have read John Maynard Keynes’ 1936 book, “The General Theory of Employment, Interest and Money,” and we have not. Keynes believed that any nation running trade deficits was flirting with disaster. The US hasn’t had a trade surplus since 1975. So, either Keynes was simply wrong or badly timed but, my guess, is Keynes never envisioned any country willing to endure trade deficits and deficit spending in some neoliberal nightmare for 4 decades.

    Maybe it was just more reassuring to read NYT BS artist, Thomas Friedman, that it doesn’t matter where things are produced as long as they’re “imagined” right here in the US. Meanwhile the exporters laugh all the way to the bank.

    • Boomer says:

      Ross Perot. 30 years ago. He didn’t foresee the Far East vacuum. We got suckered.

      “We have got to stop sending jobs overseas. It’s pretty simple: If you’re paying $12, $13, $14 an hour for factory workers and you can move your factory South of the border, pay a dollar an hour for labor, … have no health care—that’s the most expensive single element in making a car— have no environmental controls, no pollution controls and no retirement, and you don’t care about anything but making money, there will be a giant sucking sound going south.
      … when [Mexico’s] jobs come up from a dollar an hour to six dollars an hour, and ours go down to six dollars an hour, and then it’s leveled again. But in the meantime, you’ve wrecked the country with these kinds of deals.”

      • Harrold says:

        “its not like *my* job would ever be outsourced”

        – American people in 1992.

        • NBay says:

          While many raked in tons of that “can’t lose” stock market money. My boomer cohort now in the gated communities on golf courses. People who can should check out the gated communities south of Hwy 4 around Murphys to Arnold….well, use google maps…it’s a mind blower…even an airport.

          In Detroit in 1971 I saw, “Hungry, eat your Toyota” bumper stickers everywhere.

          But you know what, the Toyotas WERE better, the Japanese and others out engineered us while we still played marketing games. But today its electronic gadgets instead of fins and power, and ALL car manufacturers are now playing, “only we know how to fix it, and it’s not worth it at 200-300K mi….so get a new one”. Wish I had one of those 100’s (if not 1000’s) of Honda 600s that were dumped in the ocean off Seattle. Fun little car.

      • max says:

        job do not go to the cheapest place — like Africa — no law and order, no skilled workers, no infrastructure…

        well unions and politicians did good job by placing you out of work, with all promises of safety, clean environment and higher pay.

    • Heinz says:

      The tacit understanding by Americans about globalism and offshoring of our productive jobs (notably manufacturing) was this:

      They (foreign workers) will sweat and produce our goods while we sit comfortably and ‘think’ (producing financial products, information technology, intellectual property like Hollywood movies, etc).

      It turned out to be an imbalanced trade proposition indeed.

      And with so much of our critical goods (computer chips, N95 masks, medical equip. etc) and everyday consumer goods now dependent on foreign countries and fragile supply chains it all looks a bit dark and ominous.

      • cas127 says:

        One (possible) hope…the rise of the internet tremendously facilitates information flows.

        Including how to set up manufacturing processes.

        So the speed/thoroughness with which the US might attempt to re-industrialize, could be handled much, much faster than in the absence of internet info flows.

    • David Hall says:

      Nixon took us off the gold standard about 50 years ago -1971.

      The U.S. is #1 in corn production. The price of corn has doubled within a year. There is a happy farmer somewhere.

      • Dan Romig says:


        I was thinking along the same lines as soybeans from US farms will be sold at higher prices to China – even though the number of bushels may not change much. That should move up the export number a fraction.

      • NBay says:

        How much corn is totally wasted making ethanol? That’s FOOD we are talking about, not 1:1 ROE FUEL. Not to mention wasted good farmland and water from the Ogalala….BTW, your answer is “mostly in Iowa”

  5. nick kelly says:

    Mostly agree but you can’t make rare earths ( elements) They occur where they occur, those locations are rare and for some reason China has most.
    Best hope may be to find them in Africa or somewhere else and do a ‘China’ number on them. Lend the money to develop the mines and take control.

    Another hope: recycle all electronics to recover germanium etc. I have no idea how practical/economic this is but since germanium is in there I assume it is recoverable at some cost.

    • Wolf Richter says:

      nick kelly,

      Rare earths” are not rare. They’re fairly abundant, and the US has plenty of it, and there are some rare earth mines in the US. But the process of mining and refining rare earths pose huge environmental challenges that are expensive to resolve. In China, years ago, the rare earths miners didn’t care about the environment, and they went for it no holds barred. But now the Chinese government is cracking down too.

      • Up North says:

        Rare earth metals are just not found in pure ores and lines (like gold say). There’s a ton of purifying to do. But they are available in better concentrations in some areas in the world. China put it’s hand on most of it 10-20 years ago already. We are ALL SO LATE in this. Here in Canada some Chinese interests just recently tried to buy yet another refiner, only to get stopped by CSIS. In Canada, the only ones allowed to openly criticize China are the likes of CSIS.

    • NBay says:

      Germanium and other ckt board stuff like silver is recycled in melting/burning operations in Bangladesh getting what they can off them along with tons of toxic smoke. They also beach used ships there and many die cutting them up for scrap, practically by hand.
      Also germanium is not a “rare earth”….Lanthanide series (I think) elements mostly for doping. Lithium isn’t either, I don’t think, but don’t know where it’s mined.

  6. SocalJim says:

    Our recent “America First” president was trying to deal with this. This trade disaster lies at the feet of every president in office between 1992 through 2016.

    Our current president is responsible for a big chunk of this trade problem. He does a great job pretending he is behind the American worker while outsourcing is back on. The inflation will be astounding. Get ready. If you are not asset heavy, you are screwed.

    • Wolf Richter says:


      I give Trump huge amounts of credit for trying. But he bungled it. The primary cause of the trade deficit is Corporate America, not China. And he never cracked down on Corporate America because stocks were what mattered to him. Biden, who has been following the trail that Trump blazed on trade and China, might actually crack down on Corporate America (we’ll see).

      • Brinda says:

        Would have been nice to hear your support the last 4 years—pretty hard to get the job done when the entirety of the media is against you and your goals. Increasing taxes won’t fix the problem! Sh/t! Y’all get what you deserve as far as I’m concerned—-“F IT” is my new motto!

        • Wolf Richter says:


          Even though I try to stay out of politics, I wrote quite a bit about it at the time. But yes, it was kind of a lonesome fight, in terms the media. I got knocked around quite a bit in the comments too :-]

          I even wrote to the White House in support of Trump’s trade policy but also with concerns that he was bungling the discussion because he didn’t go after Corporate America, and I made some suggestions — and I published the letter in the article linked below.

          From the article: “With all this activity going on [the US-China tit-for-tat at the time], it’s easy to lose track of what is actually the issue. Trump is trying to deal with the huge and unsustainable US trade deficits that have ballooned over the past two decades. But it involves two groups of entities…”

          Here is the whole thing:


        • MiTurn says:

          “But yes, it was kind of a lonesome fight, in terms the media. I got knocked around quite a bit in the comments too.”

          You’re a hero Wolf, keep swinging!

        • NBay says:

          Paulo, sad but unfortunately is all too likely…..but that’s also why the huge military, as a last line of gunboat “diplomacy”. Better go after the Corps soon, like Trump promised, but never did. No other GOP nominee dared say it, so he won, but he never intended to. Rich people are his bread and butter.

      • SocalJim says:

        GM and Ford have just released new plans to build new products at factories outside of the US. Our new president did not say a word about it. He just pretends to be for the American worker … just like all the other people in office between 92 and 16.

        • Wolf Richter says:


          “Saying” didn’t do anything under Trump either. Changing the tax code and putting on tariffs will.

          That said, there is HUGE opposition in the US against cracking down on Corporate America on trade. They’re dragging out veritable baskets of red herring, and they’re spending a quadrillion on lobbying, and it may well be that what Trump did was as far as any President could go.

      • cas127 says:

        “The primary cause of the trade deficit is Corporate America, not China.”

        Corporate governance has been a lazy crap fest but nothing could have skewed the international trade macro economy more than Chinese financial restraints at home which,

        1) Required mandatory conversion of US export proceeds in USD into Yuan (the supply of which the CCP could then directly manipulate),

        2) Pt 1 subverted the recycling of China export proceeds into US exports to China, creating unprecedentedly enormous, perpetual trade deficits in China’s favor, and

        3) The forced conversion into Yuan (vs being spent on foreign goods) also had the effect of creating huge amounts of captive Chinese domestic savings, which

        4) Forced Chinese interest rates down, which

        5) Further supercharged the building of new Chinese factories, to be used to,

        6) Pump out more export goods.

        In effect, the CCP compelled its populace to massively save (building up domestic production) by subverting intl trade surplus recycling (into what would have been Chinese consumer goods from around the world)

        As for the US, titanic, short sighted offshoring could not have survived natural intl exchange rate adjustments…had the CCP not short-circuited those adjustments.

        • intosh says:

          In other words, China followed its long-term best interests and did not play into USA’s hand.

        • jm says:

          Right on! It’s vital to understand that a nation can run a trade surplus only by lending its customers the money to buy its exports. One way to do this is exchange rate manipulation. For years the Chinese government paid out 8.2 yuan for every dollar an importer brought in, though in fact the dollar was worth in buying power less than 2 yuan. This produced in net effect essentially a loan of 6.2 yuan to the US for every dollar of imports, and made Chinese labor appear to cost less than a quarter of its actual value. And that value came indirectly out of the pockets of China’s workers.

          Note that the only way the loan can ever be repaid is for the US to start running a trade surplus, which will not happen in the foreseeable future because we have lost the ability to make exportable things. Although in theory the Chinese could use the accumulated dollars to buy up America, the government is not going to allow that. The US can put in place the same kind of laws preventing foreign purchase of land and companies that other countries have. So the loans to America end up as a permanent loss for China as a nation.

        • cas127 says:


          Please comment here more.

          Americans have been very poorly educated on intl trade dynamics (for decades it was essentially irrelevant to the US economy…far, far, far from the case of the last 20 yrs).

          You seem to have a pretty strong insight into the occasionally tricky dynamics of intl trade…please share your ideas here more, we can all use them.

      • Petunia says:

        The senator from the biggest tax haven in the world is unlikely to crack down on corporate america, now that they have made him president.

        • Lisa_Hooker says:


        • Swamp Creature says:

          Yep, I nominate lunch bucket Joe to the head of a task force looking into credit card company’s unfair and monopolistic business practices.

      • Depth Charge says:

        Trump was called racist for taking on China, but now that Biden is doing it he’s hailed as a hero. I can’t stand lying hypocrites who play the race card any time they think they can gain some leverage.

        • intosh says:

          Who called Trump a racist when he tackled trade with China?

          With blanket baseless statement like yours, you can’t be taken seriously.

        • Depth Charge says:

          Uh, it was all over the media. Do some Googling and see for yourself. The headlines were everywhere:

          “With DJT bringing xenophobia back, it’s an awful time to be a Chinese abroad.

          Alice Wu says China bashing is back in fashion, months into the US-China trade war.”

        • intosh says:

          An opinion piece on the South China Morning Post? You serious?!

        • NBay says:

          intosh, VERY CRISP and incisive commenting, and in this case, excellent fast research. Bravo!

      • Jdog says:

        To be fair, he really could not devote his full attention to trade or anything else considering the opposing party was launching one impeachment after another the entire 4 years.
        In reality, both parties support globalism, and globalism rapes the average citizens to make trillions for corporate overlords.
        Anyone who thinks government is working in the interests of the American people is delusional.
        It is the corporations who write all the bills, not Congress. They then bribe Congress members until those bills are made law.
        We no longer have a Representative Republic, we have a feudal dictatorship where the Corporations and the Government conspire to exploit the public.
        But you cannot blame the Corporations and Government for this situation because in the end, the people only gets the Government they deserve.

        • Dan Romig says:

          Amen brother Jdog.

          Anyone who casts their vote in November for Team Red or Team Blue for Congressional representation, and to a slightly lesser degree, Executive Branch representation need only to look in the mirror to see where government dysfunction begins.

          Granted, the two party duopoly has done a damn good job limiting options for voters to choose from that are outside the status quo, but they do exist.

          Since Wolf’s site is about “Business, Finance and Money.”, to me the most egregious example of corporations writing bills for Congress to influence the three pillars he devotes this wonderful site to can be seen in the December 2014 “Cromnibus Bill” which was written by Citigroup.

          The Power Structure in place is happy to let the ‘American Dream Not-Come-True’ continue, as it suits their purposes quite nicely.

      • max says:

        The Parable of the Workers in the Vineyard
        Matthew 20:1-16

        15 Don’t I have the right to do what I want with my own money? Or are you envious because I am generous?’

        unions and politicians pass laws which give opportunity to people outside of USA borders to compete

        • 91B20 1stCav (AUS) says:

          max- this was the (lost sight of and now failing) ideal following WWII in order to (hopefully) provide a market-based alternative to a future one…

          may we all find a better day.

      • John R Knox Jr says:

        What worries me what the end-game is going to be. The Fed can’t overcome the world forever. Where in the best place to put one’s money. It’s unlikely that the renminbi will become the world currency due to China’s chicanery. It will take American sacrifice as in WWII, but I don’t see any willing souls ready to bring America back.

      • Swamp Creature says:


        So far its all talk and no action.

      • Al says:


        Don’t bet on any sort of crackdown on Corporate America from a Biden administration.

        Case in point…

        Biden has recently appointed Cass Sunstein (very much an anti-regulatory, neoliberal goon) to some new, nonsense post in the DHS that is *somehow* coupled to the OMB….and, therefore, has some influence in crafting economic policy. I’m sure you can recall Sunstein’s stint at the OIRA when he reveled in his record of almost-categorically quashing any new regulations for corporations.

        In other words, however much money a Biden administration is willing to spend on the fiscal side – its overall ethos is still very much that of the free-market fundamentalist 90s…

        Let the administration get a whiff of inflation before the mid-term elections and watch all this “Buy American”, “reshoring” facade collapse like a house of cards.

    • Tim says:

      Seriously? You put this at the feet of every president over the last 24 years but somehow Biden is responsible for big chunk of it after three months in office?

      • SocalJim says:

        For decades Senator Biden pushed free trade bills, then under Obama, he pushed more free trade. He is a hoax.

      • intosh says:


        And regarding Trump. From this very site:


        Trade deficit have only worsen with Trump. So lots of smoke and mirror but no result.

      • Swamp Creature says:

        Biden is a Gigantic Wrecking ball. He’s actually set the seeds of destruction of the US economy in his first 100 days. He’s got a lot of help from Congress, Jerome P and Janet Y.

        Read “When Money Dies” to see what happens next. We’re in chapter 1 of the book.

        Welcome to Weimer Republic 2.0 , Enjoy

        • Petunia says:

          2022 is the new 1932.

        • BigAl says:

          More like Haiti 2.0

          At least Germany retained the means to rebuild the means of production after its hyperinflationary period.

          The USA workforce is now composed of fast food workers and college graduates with degrees in Gender Studies, Folklore and Mythology, and Marketing.

          Good luck rebuilding with that.

        • Swamp Creature says:

          We are in the equivalent of Weimer Germany 1921. Just when they thought things could not get worse they did. It got worse, worse, and worse. The German people were like lemmings. They were in a daze when things went to hell. Just tried to survive from day to day and feed their families. Same thing happened in Austria and Hungary. This is happening here.

  7. MCH says:

    Relax, it’s ok, this is all “transitory”

    I believe that is the word JP used? The big picture remains optimistic according to the J team, although the weakest of the Js went off script a little yesterday with that dirty R word when it came to interest rates.

    Oddly you’ll note the word transitory has not been defined in anyway. After all, in the history of the planet, the dinosaurs as a species could have been considered transitory.

    • Anthony A. says:

      MCH: Merriam Webster defines it as:

      Definition of transitory

      1: of brief duration : TEMPORARY
      the transitory nature of earthly joy

      2: tending to pass away : not persistent

      • roddy6667 says:

        Life is transitory.

      • MCH says:

        It depends on context, right? For example, the current war on terror is transitory, the current sunspot cycle is transitory.

        In the proper context. They are. When our intrepid journalist provides the context, well, it isn’t JP’s fault that a meaning was applied that he had no control over.


        • Anthony A. says:

          Yeah, the one thing JPow never says is how long is transitory?

        • MCH says:

          Well, don’t think you will like the answer. For JP, transitory is about 15 minutes after he leaves his position. Then it becomes permanent.

    • Implicit says:

      Yep, just transitory. So I guess we transcend to deflation from inflation, like a middle class person going to the poverty level, or the poverty level to the street level.
      It takes time to destroy the dollar, kind of like boiling a frog, or stealing from the lower classes until they die; like a frog they won’t even notice it.

  8. Trucker guy says:

    Globalism is a race to the bottom at the end of the day. You have billions of poor serfs and very few wealthy westerners. By dint of being a us citizen and working a full time job you are in the 1% globally. The model isn’t sustainable of 1st world countries in a global economy. Change doesn’t happen overnight but we’re seeing it happen. With technology as well, a society built around what “can’t be outsourced” such as service industries or goods transporting; that will be eliminated as well. ATMs are a nearly a neolithic form of this. Won’t be long, relatively speaking before services by human labor is eliminated.

    Post scarcity in the grand scheme of things is just a few inches away. In 100-200 years even 3rd world cesspools of misery and slavery won’t be able to benefit off of 1st world excessive consumerism.

  9. Heinz says:

    I am blown away by all the WTF Wolfstreet charts showing what looks like exponential growth in personal income and consumer spending, moving up in lockstep since sometime in 2020.

    Exponential growth of anything under real world conditions of course has a sell-by date attached. I think it is stale already.

    • Tom S. says:

      Without more stimulus you can bet that this record spending will be transitory.

      • jon says:

        Don’t worry: More stimulus, More UE benefits, More bans/moratorium coming.. else the whole economy would go down

      • Implicit says:

        People will run out of money, and will not be buying stuff, transcending from inflation to deflation over time. The time is the question. People will just stop buying stuff pretty soon if this inflation keeps up.

        • Tom S. says:

          I agree, the American consumer is the motor that keeps the global economy cranking. Seems awfully risky of the bankers to keep pouring in nitro until something blows and noone can afford an essential item, like a car for example.

    • Depth Charge says:

      The past $1,200 stimulus is mostly spent. What’s keeping the WTF going is the fact that tens of millions of people continue to collect record UE benefits while stiffing the landlord or not paying their mortgage, instead spending that massive monthly savings on all sorts of durable goods and toys. This doesn’t even include the PPP loan fraud where people are buying real estate and Ferraris and things. If you want to f*** something up really, really good, put the government in charge. Imagine hiring Maxine Waters to run your business.

      • Lisa says:

        My lazy 32 y/o nephew who is on the spectrum and collects disability and unemployment benefits lost his job bc he made a sexually inappropriate comment to a coworker at Goodwill. He said the reason why he won’t go get a job is because he’s making more than he was working. Plus his parents enable him.

    • Artem says:

      I hope no one shows Heinz human population vs time chart starting from 1500’s.

      • Heinz says:

        World population has stopped growing exponentially – for decades now, growth has been more similar to a linear trend.

        You can’t fool Mother Nature forever and artificial fertilizer-pumped up mechanized agricultural production won’t always work with depleted soils and climate change (not the Greta kind, BTW).

        • Artem says:

          Population growth is almost never linear for long. As Wolf would say, it’s never a straight line.

        • 91B20 1stCav (AUS) says:

          Artem-and pointed at heck?

          may we all find a better day.

        • Lisa_Hooker says:

          Population in the developed world is declining. Population in Africa and India is still growing – but they don’t have enough money to be consumers. A collapse is baked in the demographic cake. Doesn’t matter what the Fed does – although they can make it hurt more and rapidly.

  10. There is a spread there between intellectual property and services. The cost of the systems which run a payment system, and the price that is charged for the service. As someone noted, people use the internet, cost free, but those systems are expensive and complex. Electronic banking is probably the best example. Remember checking fees? Now we make instant electronic transactions with no fees. The US leads in this technology. I suppose we are going to eat it on the global vaccination distribution program as well

    • Petunia says:

      My internet has never been free. Electronic banking is paid for by the corporate clients, not free just cheaper.

      • Mr. House says:

        Or perhaps ATM fees. Cause you know, thats hard work!

        • Mr. House says:

          Or just another discouragement against using cash! But conspiracies do not exist! They take a bit when you withdraw cash and they take a bit when you use your card. But the politicians will fix this! They’ve been saying it for decades and double dog promised.

        • Right, they pay me to use their credit card, and the merchant pays a fee. The bank provides no fee accounts then sweeps your balance overnight. Your deposit is considered a loan. The power and glory hides remains hidden behind low or no service charges. What is the net worth of these service industries, compared to the net worth of the companies making durable goods? You can do a price to book comparison of GM to Google, 1.178 vs .01 but that doesn’t tell the story. Google has a book value of 316 a share versus 32 for GM. Not to mention shares outstanding. That all reflects their intellectual property. Then you measure income derived from nations with smaller economies, you have a giant asymmetry. When you export durable goods you are giving away your national treasure, the companies themselves are hollow (value) shells. The service industry in finance is another term for the vampire squid.

        • Mr. House says:

          Also i wouldn’t be surprised if they were selling the data generated from all of your card usage.

      • Lisa_Hooker says:

        Free internet? AT&T just raised my internet access by 43%. Biden is hyping broadband “access” as infrastructure with no mention of how much that access is going to cost every month, and who collects the monthly fees.

    • jon says:

      Nothing is free although it may look like free. You may not pay directly though. E.g. Free Robinhood.. not really, RH makes 100s of millions per quarter by selling trading data to other cos. FaceBook: Not free really… etc etc

  11. DR DOOM says:

    Yellen and Powell can call it transitory as we are headed to the next big lie. The old lie your post pointed to is fading away as its usefulness is at an end. The next new lie starts its journey. It may be the Transitory and Temporary shit the Fed is now dishing out. The people will believe, something . After the complete failure of all of our security services in missing the 911 event those agencies should have been stripped and/or dissolved. Nope. George pinned a medal on another George and the agencies got more money. Point is there is no down side for failing or lying from government . Apparently the electorate loves it. The people do not know what de-basement of currency is. The people do not know what sound money is. The people do know what cheap gas and booze and free government money is. Powell and Yellen better keep delivering or put the people in a trance to make them think all is good . They own it. Getting lied to , or lying and no accountability is the new American Way.

    • Mr. House says:

      “After the complete failure of all of our security services in missing the 911 event those agencies should have been stripped and/or dissolved.”

      Or the banks after 2008
      or the healthcare industry after 2020

      Are you beginning to see the pattern, believe the experts, believe the science! (who never pay for any mistakes they make)

    • Depth Charge says:

      There is no better way to anger the populace than to make them miserably poor, which is exactly what the FED and CONgress are doing. These skyrocketing prices are going to unleash a lion not seen for centuries.

      • Heinz says:

        I am still waiting for that magic moment when JaPo or Yellen utters the modern equivalent of Marie Antoinette’s famous line to near-starving French peasants– “Let them eat cake”.

        Then maybe public opinion will turn against the all-wise Fed.

      • Swamp Creature says:


        That’s Weimer Germany in 1922, 1923. They made everyone poor and it was every man for himself. It became survival at all costs. That’s where we are headed.

      • Swamp Creature says:

        ” A prostitute in the family was better than an infant corpse, theft was preferable to starvation, warmth was finer than honour, clothing more essential than democracy, food more needed than freedom”

        From “When Money Dies” p256

    • Stephen C. says:

      The FDA is getting ready to approve psychedelics so all will be good, and Janet and Jay John Law Powell will be seen as gods they claim to be.

    • You are correct, the first twenty years of this new century presented the US with (at least) three major threats, all of which were buried in subterfuge. 9/11 and the war in Iraq, the GFC, the election cyber attacks and Solar Winds hack, and the pandemic which was met with deliberate goverment misinformation. America woke up slowly. 45 put an exclamation mark on two decades of mendacity. Now American policy moves forward to confront those three problems. I think as you that the currency is the other shoe to drop. Doom is unlikely as long as government remains focused and engages in economic policy to meet the challenges. There might be better public support if the political system would address the failures of the 21st century.

  12. Seneca’s Cliff says:

    This will all change when no one wants to take our devalued fiat currency in exchange for valuable goods. Unfortunately at that point we may not be cable of exporting, but there will be a robust economy of craftsmen making useful goods such as Axes, Mule Harnesses, copper pots and bikes that can be obtained by customers with something to barter.

    • MiTurn says:

      Plywood would probably prove to be a popular trade item in Portland, if you can get it.

  13. Artem says:

    Can we see the breakdown of services? Is this just hotels and restaurants that we “export”?

    • Wolf Richter says:


      In terms of exports of services, here are the major categories. For the dollar amounts by category, click on the link in the second paragraph, and then click on “Exhibit 3,” which will download the spreadsheet with the dollar figures:

      Maintenance and Repair Services
      Insurance Services
      Financial Services
      Charges for the Use of Intellectual Property
      Computer and Information Services
      Other Business Services
      Personal, Cultural, and Recreational Services
      Government Goods and Services

      • Artem says:

        Very interesting.

        It looks like “Travel” is our most exported service, which was cut in half due to the pandemic. However, “Repair & Maintenace” services was also cut in half, which I can’t explain. Boeing and the airlines?

        We don’t export anywhere near enough tech and financial services as I would imagine.

  14. 91B20 1stCav (AUS) says:

    Wolf-another one outta the park. many thanks.

    may we all find a better day.

  15. Woof says:

    I live in Israel, the only thing that I own that was “made in America” is a pair of New Balance shoes, which I am sure were made in prisons for cheap labour.

    That’s the American image I have of US goods production, and to be honest I really wonder how true it is.

  16. JP says:

    Having been in liner shipping for almost 40 years, I can tell you that shortages and inflation are on the way to a point that frightens me. There is no space for importers. Shipments are backed up all over the world. No new capacity will come for at least 2-3 years. Once major US importer told us, “Ill take a 65% increase no discussion. Just have to have space. He took over a 125% increase and……..he still has no space. Exporters are being killed. Containers are all being moved back to the Far East to capitilize on that revenue. So no bookings are being approved and we are under attack from both sides 24/7/365. Folks we may have killed the Golden Goose in the US. No one wants to work and with the welfare state nobody has to. No bullish on the future unfortunately. The Rot is just way too deep.

  17. Khowdung Flunghi says:

    “American factories are desperate for workers. It’s a $1 trillion problem” – Headline from today’s CNN Business.

    The jobs are there, nobody in the US apparently can or wants to work. As long as the rest of the world continues to accept NFT’s in the form of US$, what’s the problem?

    • 91B20 1stCav (AUS) says:

      Khow-R&D isn’t only for your product, it’s also for your workforce. American business has invested precious little in this for some time now (…arguably the 1930’s…).

      may we all find a better day.

      • intosh says:

        Investing is your workforce is a cost; it makes your employees more mobile, less afraid (because of more opportunities) and to seek higher pay. A definitely no-no to most American businesses.

    • MCH says:

      Why would anyone want to work when enhanced unemployment pays more. That’s just counterintuitive.

      • 91B20 1stCav (AUS) says:

        MCH-so why doesn’t ‘real’ work (even working two or three gigs) pay enough in the good ol’ USA, today to offset that effect? Are we continuing in a hope (actual trend?) that the majority of our population has happily settled into the life, if not expectations, of a second/third world country? Discuss.

        may we all find a better day.

  18. Jdog says:

    I really wish you people would stop complaining. Yes, the country is being sold out, and yes, your children and grandchildren are going to live in poverty as a result, but the important thing is the élite are living like kings, and that is all that really matters…
    So please stop your complaining and just accept the fact that you are the peasant class, and the élite deserve to exploit you. It is the natural order of things.

    • auldyin says:

      I thought you guys founded the USA to get away from all that crap in Europe. No?

    • 91B20 1stCav (AUS) says:

      Aw, c’mon Jdog, if we all did that what would you have to grouse about?

      may we all find a better day.

  19. Beardawg says:

    Legit Question……

    Why can’t we just pay Americans to consume as a purpose / job, functioning like Purchasing Managers at a company? It seems we have pretty much been doing that for decades according to Wolf’s charts. Why hide it ? Just do it. Our median standard of living will decrease a bit, but compared to worldwide standards, our “middle class” could just become professional consumers.

  20. Kunal says:

    Wolf, I do not understand deeply how global economy works but I have some fundamental objections to your sky is falling reporting:
    1. How does it matter if US had a net trade deficit for decades when US continues to enjoy high quality of life, high purchasing power, and global supremacy. We can keep looking at this stat and appreciating it as much as we want but in the end it seems to have no impact on USA supremacy.
    2. How does it matter if there is inflation, money printing and record debt. Its just numbers again. As long as US maintains its premier status its just yet another stat that seems worthless. In fact as US debt and money printing has grown I see higher quality of life, record luxury and goods consumption, etc.

    To summarize, these stats are just numbers. It does not matter. If one fine day govt. decides to erase it all, sky won’t fall, USA will still remain the top dog, with high quality of life, top talent and best assets and companies, best military and best tech. I think we should look at a country’s assets and dominance and talent pool and innovation and leadership to measure its worth, not these numbers.

    • Wolf Richter says:


      I’ll just use your #2 as a counter example: “2. How does it matter if there is inflation, money printing and record debt. Its just numbers again.”

      If your pay goes to zero, and you earn nothing and you have nothing… how does it matter… It’s just numbers again.

      It does matter. A lot. Trade deficits are terrible for the economy and the labor market (that’s why they’re a negative in the GDP calculation). Inflation wipes out the purchasing power of labor. And on and on… Sure, the US will service, it always has, but we’re not talking about survival of a country here, but about one aspect of the economy.

    • Artem says:

      It doesn’t matter until other countries stop lending to us. If you use a credit card for everything and never look at the balance while making min payments, you are a fool.

      Or maybe it’s just numbers.

  21. Dan Romig says:

    Dan Laufman of Emotiva, “Why cant’ we have amazing audio and video sound at prices that don’t threaten our mortgage?”

    And from Emotiva, “Dan saw the inefficiencies in the system and the ever-climbing prices and decided to do something about it.”

    On the back of an Emotiva amp:
    “Designed in Nashville USA”
    “Precision Crafted in China”

  22. Auldyin says:

    Watching the progress of this is interesting to say the least. Not a good story.
    The country must balance the books overall so the ‘Current Account’ deficit must be balanced by a ‘Capital Account’ surplus.
    I’ve seen you do charts in the past, Wolf, about who is buying US debt. It would be great to bring all these components together so that we could watch the complete picture unfold. It’s probably a Hell of a lot of work which the Govt will have 200 clerks for.

  23. TheFalcon says:

    Please, stay inside your house and keep Netflix going 24/7 while you simultaneously fill your Amazon cart with life’s “necessities”. We’ll pick up the tab on your house payments and keep the power on for you, ok? We’ll also pay you not to work, and juice you with a little extra deposit in your account every now and then. Because we’re cool like that.

    Now keep your mouth shut and do what you’re told. All is well, don’t worry. Whatever you do, don’t swallow any red pills. Red pills bad. No questions, please. Shut up. All is well.

    • intosh says:

      No need for anyone to pick up the tab.

      We trade Dogecoins and buy NFTs to pay the bills.

  24. Bobber says:

    The biggest “export” of the USA is intellectual property that flows from US parent companies to their foreign subsidiaries. This won’t show up in the data because it’s a private transaction, if there is a “transaction” at all. The companies like it this way for tax purposes.

    This is another way the US taxpayers are subsidizing foreign economies.

  25. Swamp Creature says:

    Jim Cramer was on CNBC’s “Mad Money” today and calling Jerome Powell the quarterback of the nations financial system. Cramer said Powell was doing an outstanding job, and that it was way too early to even think about raising interest rates.

    • Island Teal says:

      Cramer….LoL LoL

      Silver and Gold are going to be much more appreciated going forward. Especially by those without their own stack. ???

    • Jdog says:

      Has Cramer ever been right about anything in his entire life? He is just a mouthpiece for the establishment.

      • NBay says:

        By his own admission he originally wanted to be a sportscaster. Using daddy’s money he got a degree, got accepted at the next higher financial education institution, GS, graduated, and now is happy as hell as a sportscaster for the Wall Street games. Like all sportscasters, he loves the sport, and yes, probably has a very high net worth.

      • Swamp Creature says:

        Actually he talks a good line. 90% of what he says is right on the money. That’s the problem. Its that last 10% that burns you if you follow his advise. He’s like that huckster in the musical “The Music Man”. A trained con artist. Same with Rich Edelman who has 3 hour show here in the Swamp on WMAL.

        • NBay says:

          GS Financial Academy grad…they seem to do well everywhere at all kinds of things.

  26. Rosebud says:

    Americans, they are too hard on themselves, esp. when talking recent economic track record. Social media is the saviour of the planet. American intelligence leads in this sector. Without it, A 5 Trillion piece of 600 year production plan artwork wouldn’t exist. Take a bow, and weigh anchor, baby, we gonna cruise the south Pacific…

  27. Finster says:

    The US is exporting all right … it’s exporting capital. Imported goods get paid for one way or another. When you net it all out, it’s trading its seed corn for stuff it burns up and wears out. It shouldn’t take an econ PhD to figure out that this isn’t the path to growing prosperity.

  28. Kaleberg says:

    I consider the trade deficit to be our way of contributing to the global stability of capitalism. The Chinese government for all its bluster has to do whatever it takes to let American consumers to import Chinese goods lest they have to deal with economic collapse and internal rebellion. They talk a good game about building and internal market, but building internal markets is politically challenging. Capitalists and commissars will fight you every inch of the way.

  29. Diogenes says:

    The biggest fraud perpetuated on the American public was that the manufacturing outsourced to Mexico, China, Thailand, and so on, through passing NAFTA, being part of WTO, etc., would be offset by US services.

    What is a service? It’s a human working, whether as an accountant, engineer, banker, electrician, or whatever.

    On services, how can a country of 320 million compete with a countries like China and India with a total population of 10 X the US, that have an annual wage of 1/8th (India) or 1/4th (China) of an American?

    To compete, the American must be 80 times or 40 times (10 x 8 or 4) more productive, must be highly skilled, disciplined, well educated, work in a moral society of trust and common beliefs.

    US world math skills rank #25 and #20 in science. China #5 in math, #6 in science.

    Corruption buys off Congress. Trump lied daily. Trust in government falls each year. Decadence is the norm.

    Is it really surprising that the elite are pursing the most rational policy? Loot the middle class and environment for as much as you possibly can before the collapse.

    • RyanL says:

      I sympathize with you nice Americans. As a Canadian the US/Canada free trade caused the company my father was employed with to move their facility to Alabama. Same thing happened at the next manufacturer he worked at. Was tough times for my family and my Dad never got a good paying job after because the people hiring didn’t want to lose their position to his experience (ageism).

      Now having said that my current employer is relying on NAFTA to keep our ability to export cars to the US.

      Globalization and free trade seem to take and give but not sure if it’s more take them give?

  30. historicus says:

    The greatest reveal of the lack of real world experience from academics…

    “Trade deficits don’t matter. The dollars must return, and the consumer gets a better deal on goods.”

    Except when the dollars “return”, there is a change of ownership and control. Chicago sold its “Skyway” to a foreign entity years ago. Chicago spent the money, and that critical tollway is now operated by foreigners. Controlled by foreigners.
    And more obvious, countries with trade SURPLUSES are on the ascent, and those with chronic deficits must print their way to some false euphoria. ($20 Trillion in 12 years)

  31. Gian says:

    I don’t mind the the whole sh*t show is about to come crashing down, as long as the SOB’s in DC get their just dessert.

  32. Tony Kemp says:

    Thanks Wolf for posting a very informational article. It deserves a lot of thoughts. As a typical American, I have been thinking for a few years of what “Globalization” really means to me and hundreds of millions of our fellow Americans. What I have experienced first hand since the sexy concept of globalization kicked off a few decades ago include:

    * Irreversibly losing manufacturing jobs to Non-US countries. Just to name a few. We have lost competitiveness to Japan on automotive, to South Korea and Taiwan on semi-conductor processing; to India and Philippine on customer services and to China on steel, toy and face masks etc.

    * In the same period of time, talents and capitals have been more and more concentrated on a few technology companies such as FAANG and some hot startups.

    * In the same period of time, CEOs and executives of Fortune 500 companies have also become more and more international. If we truthfully believed we stilll have the best education system in the world, why wouldn’t our own outstanding graduates be able to manage companies like Google, Microsoft and Pepsi etc.?

    *Then the Wall Street. If you had ridden the waves in the past a few decades with owning stocks, houses or Bitcoins, lucky you! However, a majority of our population only owns a disproportionally tiny portion of them, thus rendering the top 1% controlling more than twice as much equity as the bottom 50% of all Americans combined.

    So what does “Globalization” mean to me ? You tell me.

  33. chris says:

    As long as we’re trading dollars for stuff, the trade deficit doesn’t matter, and is actually good. I’d much rather have stuff than worthless dollars. Just keep the gold. When dollar hegemony ends, and it will, we’ll be pining for the good old days of trade deficits

  34. Avraam Jack Dectis says:

    Might be good if those graphs went back to 1980, at least, to highlight how far we have dropped.
    Trade policy comes out of DC and those who made the policies that got us here and those who provided the economic rationalisations to those policy makers should be given proper credit – but they instead seem to have disappeared down a memory hole.

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