French-German yield spread.

[All Along The Watchtower]

A large inflow of capital into the US might not necessarily be a good thing, since it would drive up the dollar again.

And it would hurt American exporters, no?

[All Along The Watchtower]

A large inflow of capital into the US might not necessarily be a good thing, since it would drive up the dollar again.

And it would hurt American exporters, no?

Yes, exactly. A stronger currency decreases relative competitiveness on the global level.

It's interesting, though, that the US trade deficit has grown so much in the past few decades.What are the reasons for that, historically? It started in the 1960s IIRC.

[All Along The Watchtower]

It's interesting, though, that the US trade deficit has grown so much in the past few decades.What are the reasons for that, historically? It started in the 1960s IIRC.

1) Appreciated currency allowing Americans to live better lives through purchasing power
2) Increase of other competitive countries
3) High cost barriers for many international business have fallen(such as shipping costs, duties/tariffs, instability, **capital flows**, etc.)
4) Lower cost workers overseas
5) Lower taxes overseas
6) Lower regulations overseas
7) Currency manipulation overseas
The list goes on and on!

^^Since I understand some of those you may have a knee jerk negative reaction to and not want to agree with I'll just summarize it in a way that nobody would really disagree with:

The quality of the output in the US divided by the cost of doing business(the definition of value) has gone down or not up as fast as the rest of the world.

A company makes a decision on a particular place based on the quality of the output against its cost of doing business. Many parts of the world are offering better value propositions than the United States does.

1) Hasn't the US dollar's value decreased significantly in the past four decades?

Also, re: output and cost of doing business, hasn't output and productivity increased in America?

[All Along The Watchtower]

It's interesting, though, that the US trade deficit has grown so much in the past few decades.What are the reasons for that, historically? It started in the 1960s IIRC.

1) Appreciated currency allowing Americans to live better lives through purchasing power
2) Increase of other competitive countries
3) High cost barriers for many international business have fallen(such as shipping costs, duties/tariffs, instability, **capital flows**, etc.)
4) Lower cost workers overseas
5) Lower taxes overseas
6) Lower regulations overseas
7) Currency manipulation overseas
The list goes on and on!

^^Since I understand some of those you may have a knee jerk negative reaction to and not want to agree with I'll just summarize it in a way that nobody would really disagree with:

The quality of the output in the US divided by the cost of doing business(the definition of value) has gone down or not up as fast as the rest of the world.

A company makes a decision on a particular place based on the quality of the output against its cost of doing business. Many parts of the world are offering better value propositions than the United States does.

1) Hasn't the US dollar's value decreased significantly in the past four decades?

Also, re: output and cost of doing business, hasn't output and productivity increased in America?

1) a. Well the Dollar strengthened considerably between 1980 and 2000 and then has since fell considerably. b. Some other countries are starting from a much lower value to begin with. c. certain countries like China and Germany(since joining the Euro) have artificially devalued currency and much more so than the US.

Output and productivity has increased but cost of doing business has also gone up a little. But really its the cost of doing business in other countries that has fallen like a rock(that is primary driver) and there output and productivity is rising very fast. Basically that means that the rest of the world showed up to compete for a change and the US is acting like they aren't even there and haven't really changed anything to respond.

I see. Well, the reason the US hasn't changed much is that we're still operating under a Post-WWII economic strategy, for all intents and purposes. And that's when America was THE economic power.