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Growing trade deficit is selling the nation out from under us (2003) [pdf]

(faculty.washington.edu)
162 points TaurenHunter | 1 comments | 04 Apr 25 09:20 UTC | HN request time: 0.31s | source
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nipponese ◴[04 Apr 25 11:55 UTC] No.43580949[source]▶
I feel like a lot of people are really getting stuck on the Trump stuff and missing Buffetts core argument. Here's a pretty simple guy:

When the US has a trade deficit with China, it tries to balance that out by issuing debt in the form of treasuries.

As more treasuries get issued to foreign nations, the risk to American sovereignty increases. People really forget Japan's blitz on US real estate and businesses in the 80s and the drastic actions of that era the US took to knee-cap Japan.

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snowwrestler ◴[04 Apr 25 12:24 UTC] No.43581221[source]▶
American sovereignty is a matter of geography, firepower, culture, and law. It’s not easy to threaten.

And private trade deficits are not balanced by sovereign debt, they are balanced by private debt and foreign direct investment, which don’t threaten sovereignty.

The 1990s U.S. reaction to Japanese business success was primarily driven by popular xenophobia, not economic analysis. It was resolved by the dotcom bubble, an explosion of American innovation that changed the conversation. Not by government policy.

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nipponese ◴[04 Apr 25 12:31 UTC] No.43581290[source]▶
It's hard to ignore the implosion of the Japanese real estate bubble as a contributor of receding Japanese influence in the US since then. The Plaza Accords are widely attributed to this.
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1. snowwrestler ◴[05 Apr 25 03:24 UTC] No.43590423[source]▶
Maybe hard to ignore in Japan. In the U.S., their success was based on their leadership in technology innovation, not real estate. Leadership which was eaten by the U.S. tech industry starting in the late 90s.