Basically, we are buying far more stuff from the rest of the world than they are buying from us. That means that far more money is constantly leaving the country than is coming into the country. In order to keep the game going, we have to go to the people that we bought all of that stuff from and ask them to lend our money back to us. Or lately, we just have the Federal Reserve create new money out of thin air. This is called "quantitative easing". Our current debt-fueled lifestyle is dependent on this cycle continuing.
In order to live like we do, we must consume far more wealth than we produce. If someday we are forced to only live on the wealth that we create, it will require a massive adjustment in our standard of living. We have become great at consuming wealth but not so great at creating it. But as a result of running gigantic trade deficits year after year, we have lost tens of thousands of businesses, millions upon millions of jobs, and America is being deindustrialized at a staggering pace.
Most Americans won't even notice, but the latest monthly trade deficit increased to 42.3 billion dollars...
The U.S. trade deficit climbed to the highest level in five months in February as demand for American exports fell while imports increased slightly.
The deficit increased to $42.3 billion, which was 7.7% above the January imbalance of $39.3 billion, the Commerce Department reported Thursday.
When the trade deficit increases, it means that even more wealth, even more jobs and even more businesses have left the United States.
Have you ever wondered how China has gotten so wealthy?
Just a few decades ago, they were basically a joke economically.
So how in the world did they get so powerful?
Well, one of the primary ways that they did it was by selling us far more stuff than we sold to them. If we had refused to do business with communist China, they never would have become what they have become today. It was our decisions that allowed China to become an economic powerhouse.
Last year, we sold 122 billion dollars of stuff to China.
That sounds like a lot until you learn that China sold 440 billion dollars of stuff to us.
We fill up our shopping carts with lots of cheap plastic trinkets that are "made in China", and they pile up gigantic mountains of our money which we beg them to lend back to us so that we can pay our bills.
Who is winning that game and who is losing that game?
Below, I have posted our yearly trade deficits with China since 1990.
Let's see if you can spot the trend...
It has been estimated that the U.S. economy loses approximately 9,000 jobs for every 1 billion dollars of goods that are imported from overseas, and according to the Economic Policy Institute, America is losing about half a million jobs to China every single year.
Considering the high level of unemployment that we now have in this country, can we really afford to be doing that?
Overall, the United States has accumulated a total trade deficit with the rest of the world of more than 8 trillion dollars since 1975.
As a result, we have lost tens of thousands of businesses, millions of jobs and our economic infrastructure has been absolutely gutted.
Just look at what has happened to manufacturing jobs in America. Back in the 1980s, more than 20 percent of the jobs in the United States were manufacturing jobs. Today, only about 9 percent of the jobs in the United States are manufacturing jobs.
And we have fewer Americans working in manufacturing today than we did in 1950 even though our population has more than doubled since then...
Millions of good paying jobs have been lost.
As a result, the middle class is shriveling up, and at this point 9 out of the top 10 occupations in America pay less than $35,000 a year.
For a long time, U.S. consumers attempted to keep up their middle class lifestyles by going into constantly increasing amounts of debt, but now it is becoming increasingly apparent that middle class consumers are tapped out.
In response, major retailers are closing thousands of stores in poor and middle class neighborhoods all over the country. You can see some amazing photos of America's abandoned shopping malls right here.
If we could start reducing the size of our trade deficit, that would go a long way toward getting the United States back on the right economic path. READ MORE…