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    Default Is Trump right twice a day? US trade policy going down the shitter

    The Economist and WSJ both grapple with an unsettling possibility:

    Why Germany’s current-account surplus is bad for the world economy

    [...] There is no question who has the better of this argument. Mr Trump’s doctrine that trade must be balanced to be fair is economically illiterate. His belief that tariffs will level the playing field is naive and dangerous: they would shrink prosperity for all. But in one respect, at least, Mr Trump has grasped an inconvenient truth. He has admonished Germany for its trade surplus, which stood at almost $300bn last year, the world’s largest (China’s hoard was a mere $200bn). His threatened solution—to put a stop to sales of German cars—may be self-defeating, but the fact is that Germany saves too much and spends too little. And the size and persistence of Germany’s savings hoard makes it an awkward defender of free trade. [...]
    This Time, Trump Is Right About Trade

    [...] Though German Chancellor Angela Merkel did not seem to care for the messenger, she should nonetheless hear the message. While Mr. Trump gets a lot wrong about trade, on this particular point he’s right. Germany’s current account surplus, which combines trade and investment income, is now the world’s largest. Along with China’s, it is a dangerous imbalance that leaves others, including the U.S. and the rest of Europe, worse off.

    It’s not just Mr. Trump who thinks so. “The criticism is right. Germany’s trade surplus is excessive,” says Marcel Fratzscher, president of DIW Berlin, a prominent German think tank. Mervyn King, former governor of the Bank of England, went further, arguing, “President Trump is right when he identifies a problem with current international trading and monetary relationships.” [...]
    If you don't have a subscription to WSJ: https://fbkfinanzwirtschaft.wordpres...t-about-trade/


    Do you agree? If so, how can the situation be improved? How can Germany be persuaded to change its policies, if, indeed, that's where the problem lies?

    Discuss as if Trump doesn't exist.
    Last edited by Aimless; 03-01-2018 at 08:24 PM.
    "One day, we shall die. All the other days, we shall live."

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