Talk:Balance of trade

Not sure this is correct.....

The reason for this is that it is cheaper to buy from other countries where the costs of production are cheaper.

In a country with an advanced economy, primary and secondary industries are likely to be depressed, or uncompetitive. Thus they are restricted to niche and specialist goods. Tertiary industry will likely make a lot of money for the country, and specifically employees of such companies. As the general level of wealth in a country rises, the people will demand more and more goods, and these must be imported to satisfy demand. Thus a negative balance of payments can be generated, but is not necessarily indicative of negative economic activity.

Hi,

On the Dutch Wikipedia I've written a piece of Balance of Trade as well. (OK, I know that there is no such thing as an acknowledged author on Wikipedia, I just happened to be the guy who wrote that text...)

I like this article, but there is one line that may create an incorrect impression. In the second paragraph under "Economic Impact", it says "essentially allowing the United States to expert pieces of paper and get real goods and services in return". Now, I think that we would agree that those "pieces of paper" are, for instance, US Treasury bonds, Treasury bills, and bonds issued by (in this example) American companies. But they being bonds, this means that (a) there is an obligation to make periodical coupon payments to however hold those bonds, and (b) to redeem the pace value of those bonds at maturity, again, to whoever hold those bonds at the maturity date. And I think we also agree that the them holders of those bonds have no obligation to buy refinancing bonds.

The phrase "pieces of paper" seems to suggest (if only by the use of the word "real" when denoting "goods and services") that they are "not real" obligations, and that the issuers of those bonds can, should they choose to do so, decide to wash their hands of the affair, so to speak, and to renege on their obligations. Now, I would be extremely surprised if this were the view held by, for instance, the US government. (And I need hardly state that the mere suggestion that this would be the official view of the American government would send the financial markets in a turmoil that would make a previous financial crises look like a Sunday barbecue!)

I would suggest that whoever looks after this page reconsider this phrase.

I'm looking forward to duscussions on this issue on my user page on the Dutch Wikipedia, or on another convenient location. My username is MartinD.

Regards, Martin

Hey, is anybody ever going to reply to what I wrote here? if not, I'm going to edit it myself.

Regards, Martin

Hi Martin

I think what the original author was trying to say is that paper is a monetary item whereas goods and services are created in the real sector. I agree with you that someone unfamiliar with this economics-speak might interpret the sentence as you describe. It should be changed. mydogategodshat 16:51, 30 Oct 2004 (UTC)

Hi Mydogategodshat,

Thank you for your reply. My point simply was that it would be undesirable if people outside of the USA would think that it might be official US policy to default on T-bonds... The phrase "pieces of paper" sounded rather misleading. Regards, Martin

move stuff to "Reserve currency"?

Since the Wikipedia entitled "Reserve currency" is rather scant, and since the section of this article under the title "Economic Impact of Balance of Trades" deals nicely with the issue, I think that the relevant parts of that section's text should be moved over to "Reserve currency". Then the "Economic Impact.." section could simply link to that article. Any objections? Archie Paulson 01:00, 27 Jan 2005 (UTC)