Americans overspending

[eugenekop]

1.
Peter Schiff says that Americans don't produce a lot but spend beyond their means. On the other hand a Chicago school and a Libertarian economist Thomas Sowell believes that the American trade deficit is nothing to worry about. How is it possible that two economics with very similar opinions think two opposite things?

2.
The American government definitely overspends with its huge deficit, but do the Americans themselves overspend? The low interest rates caused many people to borrow money, but the vast majority of people who borrowed money should be able to return it. After all those people with the bad credit have already defaulted in the latest crisis. So who exactly is overspending now?

[Brian4Liberty]

How is it possible that two economics with very similar opinions think two opposite things?


Different agendas?

[Zippyjuan]

A trade deficit and the government debt are two different things. A county could be living within its mean and be very wealthy and have a healthy economy and still run a trade deficit. A trade deficit in and of itself is not necessarily bad. It depends on WHY you have a deficit. If you have a strong economy producing excess wealth and demand more goods than you can produce yourself, then it is a good thing to have a trade deficit. If you have a trade deficit because you are simply unable to produce what your country needs, then you have a problem.

Consider oil. We have a trade deficit in oil because we cannot produce enough of what we need there. We have to rely on others to produce it for us. That puts us in a tight spot if oil imports were to suddenly stop. It would have a severely negative impact on the country for a very long time if it was perminant. Yes we import a lot of stuff from China but if they were to suddenly stop sending us goods, we could over time adjust to that. We can increase our own production or buy from other countries to replace what we lost from China. It is important, but not as critical.