- Warren Buffett warns that the growing US trade deficit is transferring the country's wealth abroad at an alarming rate. He uses the analogy of two islands, Thriftville and Squanderville, to illustrate how continued deficits could result in foreigners eventually owning most of America's assets.
- Buffett proposes issuing "Import Certificates" to US exporters equal to the value of their exports. Exporters could then sell these certificates to importers, who would need them to import goods into the US. This would balance trade by making US exports more competitive and increasing domestic job growth while making imports slightly more expensive.
- If not addressed, Buffett argues the trade deficit will continue transferring about $500 billion in wealth abroad annually
HOW BITCOIN BLOCKCHAIN AND RIPPLE MAY HELP KILL U.S. DOLLARSteven Rhyner
{The U.S.|The United States} Dollar {has|has actually} ruled the {financial|monetary|economic} {world|globe} for longer {than|compared to} {most of|the majority of|a lot of} us {have|have actually} {been alive|lived}. {As far as|As for|Regarding} the {vast|large|huge|substantial} {majority|bulk} {of us|people} {knows|understands|recognizes}, the {world|globe} orbits the {sun|sunlight}, {and|as well as|and also} the {sun|sunlight} orbits {the U.S.|the United States} Dollar.
- The United States has the largest economy in the world, driven primarily by personal consumption which accounts for around two-thirds of total production.
- However, the economy faces issues such as a large national debt, high trade and budget deficits, an underfunded pension system, and overbuilding in hazardous coastal and flood-prone areas.
- Additionally, rising commodity prices and a declining housing market pose challenges, while low savings rates and a lack of a value-added tax put the US at a competitive disadvantage internationally.
This document summarizes economic trends from September 2009. It discusses six factors driving economic growth: 1) massive stimulus spending, 2) businesses reversing purges, 3) rising confidence, 4) housing and auto industries stabilizing, 5) improving exports, and 6) stalled increases in mortgage rates and oil prices. It argues the recovery will continue surpassing expectations with 4% GDP growth. It also says the consumer's role is unclear and inflation will likely remain stable.
This document discusses counterfeit money and the legal consequences of using it. It notes that counterfeit money is illegal and can result in jail time. Several examples are provided of individuals who were jailed for using fake currency. The document encourages saving and budgeting as better alternatives to obtaining money. It also provides guidance on identifying security features of genuine Singapore notes to distinguish them from counterfeits, such as watermarks and varying ink shades. Students are tasked with designing their own classroom currency, and including security features to prevent counterfeiting.
This document lists over 40 publications, presentations, and seminars delivered by Mr. Esen Cağlar between 2005-2015. The presentations and papers focused on topics related to regional development, industrial policy, economic transformation, competitiveness, and Turkey's experience with regional integration and relations with neighboring regions like the Mediterranean and Middle East. Many were delivered at international conferences and workshops organized by institutions like OECD, World Bank, European Institute of Mediterranean, and universities.
HOW BITCOIN BLOCKCHAIN AND RIPPLE MAY HELP KILL U.S. DOLLARSteven Rhyner
{The U.S.|The United States} Dollar {has|has actually} ruled the {financial|monetary|economic} {world|globe} for longer {than|compared to} {most of|the majority of|a lot of} us {have|have actually} {been alive|lived}. {As far as|As for|Regarding} the {vast|large|huge|substantial} {majority|bulk} {of us|people} {knows|understands|recognizes}, the {world|globe} orbits the {sun|sunlight}, {and|as well as|and also} the {sun|sunlight} orbits {the U.S.|the United States} Dollar.
- The United States has the largest economy in the world, driven primarily by personal consumption which accounts for around two-thirds of total production.
- However, the economy faces issues such as a large national debt, high trade and budget deficits, an underfunded pension system, and overbuilding in hazardous coastal and flood-prone areas.
- Additionally, rising commodity prices and a declining housing market pose challenges, while low savings rates and a lack of a value-added tax put the US at a competitive disadvantage internationally.
This document summarizes economic trends from September 2009. It discusses six factors driving economic growth: 1) massive stimulus spending, 2) businesses reversing purges, 3) rising confidence, 4) housing and auto industries stabilizing, 5) improving exports, and 6) stalled increases in mortgage rates and oil prices. It argues the recovery will continue surpassing expectations with 4% GDP growth. It also says the consumer's role is unclear and inflation will likely remain stable.
This document discusses counterfeit money and the legal consequences of using it. It notes that counterfeit money is illegal and can result in jail time. Several examples are provided of individuals who were jailed for using fake currency. The document encourages saving and budgeting as better alternatives to obtaining money. It also provides guidance on identifying security features of genuine Singapore notes to distinguish them from counterfeits, such as watermarks and varying ink shades. Students are tasked with designing their own classroom currency, and including security features to prevent counterfeiting.
This document lists over 40 publications, presentations, and seminars delivered by Mr. Esen Cağlar between 2005-2015. The presentations and papers focused on topics related to regional development, industrial policy, economic transformation, competitiveness, and Turkey's experience with regional integration and relations with neighboring regions like the Mediterranean and Middle East. Many were delivered at international conferences and workshops organized by institutions like OECD, World Bank, European Institute of Mediterranean, and universities.
Resources are scarce and limited in supply, so we must use them wisely. Resources face the problem of scarcity and we do not have much of the resources available. We should tune in to managing our resources carefully due to their scarcity.
El artículo habla sobre la apertura de un nuevo supermercado en Santander. El supermercado ofrece productos frescos y de calidad a precios bajos. El gerente espera que los clientes aprecien la variedad de opciones y las ofertas especiales que tendrán disponibles.
An ant works hard carrying corn to its nest while a grasshopper sings and plays. The grasshopper asks the ant why it doesn't relax instead of working. The ant explains that it is preparing food for the winter. The grasshopper doesn't see the need to prepare. When winter comes, the ant has food from its stores while the grasshopper starves with nothing. The grasshopper learns that it's best to prepare for future needs.
The document discusses the differences between needs and wants. It provides examples of items that are considered needs like shelter, water, and items required to survive. Wants are described as things that are not essential for survival but provide enjoyment, like entertainment items. The rest of the document presents hypothetical survival scenarios and lists items available for purchase to meet needs using a limited budget. This teaches the importance of prioritizing essential needs over wants in emergency situations.
This document provides instructions for an activity where students are asked to choose the two cheapest and two most expensive items from a list of products with prices. They must write the names and prices of their selections on a shopping list. The activity aims to teach students about making financial decisions based on cost.
Puberty and being a teenager can have both good and bad aspects. Teenagers should have certain responsibilities and freedoms. Some things that deeply affect teenagers include different forms of rape like acquaintance rape, marital rape, sexual abuse, and stranger rape. Various types of rape are described, such as acquaintance rape involving someone known but not close, marital rape by a husband, sexual abuse of children or teenagers by adults, and stranger rape by an unknown person.
Росшкола Обучение: 23.10. Документы на сайте и персональные данныеRosshkola
Как необходимо размещать документы образовательной организации и работать с персональными данными на сайте, чтобы не допустить нарушений регулирующего ФЗ. Начиная требованиями нормативно-правовых актов и заканчивая примерами реализации на сайте – наш опыт по работе с сайтами ОУ.
Ближайшие мероприятия – acd.rosshkola.ru
US Economic Outlook 2008-11+ (Updated 28 May 08); Discussion of Money, Federal Reserve, Dollar as World's Reserve Currency, Inflation, Deflation, Oil, OPEC, Debt, Saving Rate, Housing Bubble and Future Outlook for US Economy
The document summarizes the US economic outlook from 2008 to 2011. It discusses several factors that contributed to the housing bubble and current economic crisis, including loose monetary policy, the use of adjustable rate mortgages, and the securitization of subprime loans. It predicts a long recovery for the housing market, a doubling of the money supply leading to high inflation, and potentially major problems for the US dollar if other nations drop it as their reserve currency or demand higher prices for oil. The key recommendations are to get out of debt, save money, and potentially buy gold as a hedge against inflation and a falling dollar.
US Economic Outlook 2008-11+ ; Discussion of Money, Federal Reserve, Dollar as World's Reserve Currency, Inflation, Deflation, Oil, OPEC, Debt, Saving Rate, Housing Bubble and Future Outlook for US Economy
This document is a marketing letter promoting a book called "The Passport Book: The Complete Guide to Offshore Residency, Dual Citizenship and Second Passports". The letter warns of an impending economic collapse in the US and promotes the book as a way for readers to protect themselves and their families by obtaining dual citizenship or residency in other countries. It summarizes some of the 77 countries covered in the book and the benefits offered, such as low/no taxes, affordable real estate, visa-free travel, banking secrecy laws. The letter emphasizes that the book provides all the information needed to develop an escape plan and that it can be purchased for $69, though members pay $59. It comes with a 90 day
The document provides visual comparisons of different amounts of money ranging from $100 to $114.5 trillion to help conceptualize the scale of the U.S. national debt and unfunded liabilities. It shows that $114.5 trillion, the estimated total of unfunded U.S. liabilities, would form a skyscraper dwarfing landmarks like the World Trade Center and Empire State Building. It concludes by suggesting a solution to prevent future deficits proposed by Warren Buffett to bar members of Congress from re-election if the deficit exceeds 3% of GDP.
The document discusses three main points:
1) Government liabilities in developed nations range from $150-250 trillion, far exceeding their ability to pay given declining taxpayer bases and rising claimants. This suggests governments will default through inflation or debt repudiation.
2) Central banks are engaging in currency debasement through balance sheet expansion, amounting to the first global, coordinated devaluation in history. Hard assets are preferable to sovereign debt in this environment.
3) Central banks have destroyed 95-97% of the purchasing power of major currencies like the US and Canadian dollars since their inceptions. Low rates have inflated asset prices divorced from cash flows, contrary to central banks' mandates for price stability
The document presents a new economic theory that views wealth as having three types - raw materials, transformation ability, and finished products - and being determined globally by supply and demand. It argues that while the total real value of wealth worldwide is fixed, the relative value of different assets varies between countries. When a country's currency value becomes misaligned with global values due to overprinting, market forces will inevitably cause inflation to correct the imbalance.
Do you have a hard time trying to figure out the numbers of the current Debt Debate? Well, don’t worry; you are not the only one. We are talking about inconceivable amounts of money anyway. However, there is an excellent visual presentation of the US-Debt.
Click and see!
Are fiscal/monetary conditions affecting the macro thesis for Canadian farmland investments? Do publicly traded equity investments hedge all inflation regimes? Canada's debt to GDP - looming threat or irrelevancy?
This document analyzes Pepsico's business position in Mexico in the late 1990s. It describes how Pepsico and Coca-Cola competed fiercely for market share in Latin America between 1993-1996. While Pepsico initially had success through its bottling partner, by 1996 Coca-Cola had won the "cola war" in Latin America. The document then details Pepsico's strategies in Mexico from 1993 onward to expand its market share through its bottling partner Gemex, but explains how a series of missteps caused it to lose substantial share to Coca-Cola.
Resources are scarce and limited in supply, so we must use them wisely. Resources face the problem of scarcity and we do not have much of the resources available. We should tune in to managing our resources carefully due to their scarcity.
El artículo habla sobre la apertura de un nuevo supermercado en Santander. El supermercado ofrece productos frescos y de calidad a precios bajos. El gerente espera que los clientes aprecien la variedad de opciones y las ofertas especiales que tendrán disponibles.
An ant works hard carrying corn to its nest while a grasshopper sings and plays. The grasshopper asks the ant why it doesn't relax instead of working. The ant explains that it is preparing food for the winter. The grasshopper doesn't see the need to prepare. When winter comes, the ant has food from its stores while the grasshopper starves with nothing. The grasshopper learns that it's best to prepare for future needs.
The document discusses the differences between needs and wants. It provides examples of items that are considered needs like shelter, water, and items required to survive. Wants are described as things that are not essential for survival but provide enjoyment, like entertainment items. The rest of the document presents hypothetical survival scenarios and lists items available for purchase to meet needs using a limited budget. This teaches the importance of prioritizing essential needs over wants in emergency situations.
This document provides instructions for an activity where students are asked to choose the two cheapest and two most expensive items from a list of products with prices. They must write the names and prices of their selections on a shopping list. The activity aims to teach students about making financial decisions based on cost.
Puberty and being a teenager can have both good and bad aspects. Teenagers should have certain responsibilities and freedoms. Some things that deeply affect teenagers include different forms of rape like acquaintance rape, marital rape, sexual abuse, and stranger rape. Various types of rape are described, such as acquaintance rape involving someone known but not close, marital rape by a husband, sexual abuse of children or teenagers by adults, and stranger rape by an unknown person.
Росшкола Обучение: 23.10. Документы на сайте и персональные данныеRosshkola
Как необходимо размещать документы образовательной организации и работать с персональными данными на сайте, чтобы не допустить нарушений регулирующего ФЗ. Начиная требованиями нормативно-правовых актов и заканчивая примерами реализации на сайте – наш опыт по работе с сайтами ОУ.
Ближайшие мероприятия – acd.rosshkola.ru
US Economic Outlook 2008-11+ (Updated 28 May 08); Discussion of Money, Federal Reserve, Dollar as World's Reserve Currency, Inflation, Deflation, Oil, OPEC, Debt, Saving Rate, Housing Bubble and Future Outlook for US Economy
The document summarizes the US economic outlook from 2008 to 2011. It discusses several factors that contributed to the housing bubble and current economic crisis, including loose monetary policy, the use of adjustable rate mortgages, and the securitization of subprime loans. It predicts a long recovery for the housing market, a doubling of the money supply leading to high inflation, and potentially major problems for the US dollar if other nations drop it as their reserve currency or demand higher prices for oil. The key recommendations are to get out of debt, save money, and potentially buy gold as a hedge against inflation and a falling dollar.
US Economic Outlook 2008-11+ ; Discussion of Money, Federal Reserve, Dollar as World's Reserve Currency, Inflation, Deflation, Oil, OPEC, Debt, Saving Rate, Housing Bubble and Future Outlook for US Economy
This document is a marketing letter promoting a book called "The Passport Book: The Complete Guide to Offshore Residency, Dual Citizenship and Second Passports". The letter warns of an impending economic collapse in the US and promotes the book as a way for readers to protect themselves and their families by obtaining dual citizenship or residency in other countries. It summarizes some of the 77 countries covered in the book and the benefits offered, such as low/no taxes, affordable real estate, visa-free travel, banking secrecy laws. The letter emphasizes that the book provides all the information needed to develop an escape plan and that it can be purchased for $69, though members pay $59. It comes with a 90 day
The document provides visual comparisons of different amounts of money ranging from $100 to $114.5 trillion to help conceptualize the scale of the U.S. national debt and unfunded liabilities. It shows that $114.5 trillion, the estimated total of unfunded U.S. liabilities, would form a skyscraper dwarfing landmarks like the World Trade Center and Empire State Building. It concludes by suggesting a solution to prevent future deficits proposed by Warren Buffett to bar members of Congress from re-election if the deficit exceeds 3% of GDP.
The document discusses three main points:
1) Government liabilities in developed nations range from $150-250 trillion, far exceeding their ability to pay given declining taxpayer bases and rising claimants. This suggests governments will default through inflation or debt repudiation.
2) Central banks are engaging in currency debasement through balance sheet expansion, amounting to the first global, coordinated devaluation in history. Hard assets are preferable to sovereign debt in this environment.
3) Central banks have destroyed 95-97% of the purchasing power of major currencies like the US and Canadian dollars since their inceptions. Low rates have inflated asset prices divorced from cash flows, contrary to central banks' mandates for price stability
The document presents a new economic theory that views wealth as having three types - raw materials, transformation ability, and finished products - and being determined globally by supply and demand. It argues that while the total real value of wealth worldwide is fixed, the relative value of different assets varies between countries. When a country's currency value becomes misaligned with global values due to overprinting, market forces will inevitably cause inflation to correct the imbalance.
Do you have a hard time trying to figure out the numbers of the current Debt Debate? Well, don’t worry; you are not the only one. We are talking about inconceivable amounts of money anyway. However, there is an excellent visual presentation of the US-Debt.
Click and see!
Are fiscal/monetary conditions affecting the macro thesis for Canadian farmland investments? Do publicly traded equity investments hedge all inflation regimes? Canada's debt to GDP - looming threat or irrelevancy?
This document analyzes Pepsico's business position in Mexico in the late 1990s. It describes how Pepsico and Coca-Cola competed fiercely for market share in Latin America between 1993-1996. While Pepsico initially had success through its bottling partner, by 1996 Coca-Cola had won the "cola war" in Latin America. The document then details Pepsico's strategies in Mexico from 1993 onward to expand its market share through its bottling partner Gemex, but explains how a series of missteps caused it to lose substantial share to Coca-Cola.
The document discusses the importance of having a backup plan for high net worth individuals and families to protect their assets during times of uncertainty. It outlines several destabilizing events from recent years that increase risks globally. The coronavirus pandemic in particular has impacted political, economic, social, technological and environmental factors. The document recommends that families develop alternative citizenships, backup residences in other countries, and plans to access backup funds if needed. It provides four rules of success for an effective backup plan: 1) Consider each family's unique situation and goals 2) Make financial and personal sense 3) Select properties after jurisdictions are chosen 4) Seek unbiased professional advice to avoid conflicts of interest.
This is a presentation I made to help explain the economic situation to my friends and family. The dollar is in serious trouble and I'm trying to warn people. The most prominent person with this same viewpoint is Peter Schiff. Good luck everyone.
12-2 Productivity Its Role and Determinants Explaining why livi.docxmoggdede
12-2 Productivity: Its Role and Determinants
Explaining why living standards vary so much around the world is, in one sense, very easy. The answer can be summarized in a single word—productivity. But in another sense, the international variation in living standards is deeply puzzling. To explain why incomes are so much higher in some countries than in others, we must look at the many factors that determine a nation's productivity.
FYI: Are You Richer Than the Richest American?
American Heritage magazine once published a list of the richest Americans of all time. The number 1 spot went to John D. Rockefeller, the oil entrepreneur who lived from 1839 to 1937. According to the magazine's calculations, his wealth would today be the equivalent of about $200 billion, almost three times that of Bill Gates, the software entrepreneur who is today's richest American.
Despite his great wealth, Rockefeller did not enjoy many of the conveniences that we now take for granted. He couldn't watch television, play video games, surf the Internet, or send e-mail. During the heat of summer, he couldn't cool his home with air-conditioning. For much of his life, he couldn't travel by car or plane, and he couldn't use a telephone to call friends or family. If he became ill, he couldn't take advantage of many medicines, such as antibiotics, that doctors today routinely use to prolong and enhance life.
John D. Rockefeller
Now consider: How much money would someone have to pay you to give up for the rest of your life all the modern conveniences that Rockefeller lived without? Would you do it for $200 billion? Perhaps not. And if you wouldn't, is it fair to say that you are better off than John D. Rockefeller, allegedly the richest American ever?
The preceding chapter discussed how standard price indexes, which are used to compare sums of money from different points in time, fail to fully reflect the introduction of new goods in the economy. As a result, the rate of inflation is overestimated. The flip side of this observation is that the rate of real economic growth is underestimated. Pondering Rockefeller's life shows how significant this problem might be. Because of tremendous technological advances, the average American today is arguably “richer” than the richest American a century ago, even if that fact is lost in standard economic statistics.
12-2a Why Productivity Is So Important
Let's begin our study of productivity and economic growth by developing a simple model based loosely on Daniel Defoe's famous novel Robinson Crusoe about a sailor stranded on a desert island. Because Crusoe lives alone, he catches his own fish, grows his own vegetables, and makes his own clothes. We can think of Crusoe's activities—his production and consumption of fish, vegetables, and clothing—as a simple economy. By examining Crusoe's economy, we can learn some lessons that also apply to more complex and realistic economies.
What determines Crusoe's standard of living? ...
Ricardo V Lago -Interbank- Lima-22 04 2009 neiracar
Conferencia a la alta Gerencia de Intergroup en Lima el 22 de abril , 2009 sobre perspectivas de las economias mundial y peruana y oportunidades de inversion en bolsa
Printable Writing Paper Vintage Map Print ScrapboJulie Morales
The document provides instructions for requesting writing assistance from HelpWriting.net in 5 steps:
1. Create an account with a password and email.
2. Complete a 10-minute order form providing instructions, sources, and deadline.
3. Review bids from writers and choose one based on qualifications.
4. Review the completed paper and authorize payment if satisfied.
5. Request revisions until fully satisfied, with the option of a full refund for plagiarism.
The document provides a seasonal market outlook and review of global markets in Q4 2014 and for the year as a whole. Key points:
- Global stock markets fell sharply in mid-December due to falling commodity prices but recovered by Christmas. The FTSE 100 ended 2014 down 2.7%.
- Mining stocks and food retailers struggled while utility companies performed well, benefiting from growing demand for income and declining rate expectations.
- Commodity prices are expected to remain weak in 2015 due to slowing demand from Europe and China and increased supply, particularly of oil from US shale production.
This article discusses trends in foreign holdings of U.S. currency. The main topic is why foreigners hold U.S. dollars abroad. The key ideas are that the dollar is seen as a stable store of value during political and economic uncertainty in other countries. Recent studies estimate that 50-70% of U.S. currency is held overseas. The conclusion is that large foreign holdings of dollars have implications for monetary policy in the U.S., such as making narrow money supply measures less reliable indicators of domestic economic activity.
This article discusses how Americans should reflect on the meaning of Independence Day and freedom. It argues that over time, the U.S. government has grown tremendously in size and scope, imposing massive regulations and high taxes that hurt businesses and economic growth. The Founding Fathers would disapprove to see how current oppressive policies have replaced the tyranny they fought against. Americans need to consider if they are upholding the ideals of freedom and limit government overreach.
UnityNet World Environment Day Abraham Project 2024 Press ReleaseLHelferty
June 12, 2024 UnityNet International (#UNI) World Environment Day Abraham Project 2024 Press Release from Markham / Mississauga, Ontario in the, Greater Tkaronto Bioregion, Canada in the North American Great Lakes Watersheds of North America (Turtle Island).
Bienestar Financiero al servicio de su jubilación anticipada
Pago de su 🏡
Estudio de sus hijos
Directamente a tu cuenta bancaria
Con Tesorería Auditoria Jurídica comercial
Administración de carteras
Apalancamiento Financiero
Desarrollo de tu marca personal
Acceso a Desarrollo de varias industrias
Cuentas bancarias
Estructuras Físicas en USA y en América Central
Avalado por Bolcomer
Puesto de Bolsa Comercial
Turismo
Y mucho más
Link de registro
https://business.myinfinity.global/maurod8/
https://therusnetwork.com/
Contacto:
https://goo.su/pzm1fja
Therus network compañía de Liderazgo y banca digital
Buffett
1. America’s Growing
Trade Deficit Is
Selling the Nation
Out From Under Us.
Here’s a Way to Fix
the Problem—And We
Need to Do It Now.
by Warren E. Buffett
I’M ABOUT TO DELIVER A WARNING regarding the U.S. trade deficit
and also suggest a remedy for the problem. But first I need to mention
two reasons you might want to be skeptical about what I say. To begin,
my forecasting record with respect to macroeconomics is far from
inspiring. For example, over the past two decades I was excessively
fearful of inflation. More to the point at hand, I started way back in
1987 to publicly worry about our mounting trade deficits—and, as you
know, we’ve not only survived but also thrived. So on the trade front,
score at least one “wolf” for me. Nevertheless, I am crying wolf again and
NOVEMBER 10, 2003
FORTUNE
2. this time backing it with Berkshire Hath-
away’s money. Through the spring of
2002, I had lived nearly 72 years without
purchasing a foreign currency. Since then
Berkshire has made significant invest-
ments in—and today holds—several cur-
rencies. I won’t give you particulars; in
fact, it is largely irrelevant which curren-
cies they are. What does matter is the un-
derlying point: To hold other currencies
is to believe that the dollar will decline.
Both as an American and as an in-
vestor, I actually hope these commit-
ments prove to be a mistake. Any prof-
its Berkshire might make from currency
trading would pale against the losses the
company and our shareholders, in other
aspects of their lives, would incur from
a plunging dollar.
But as head of Berkshire Hathaway, I
am in charge of investing its money in
ways that make sense. And my reason
for finally putting my money where my
mouth has been so long is that our trade
deficit has greatly worsened, to the point
that our country’s “net worth,” so to
speak, is now being transferred abroad
at an alarming rate.
A
perpetuation of this trans-
fer will lead to major trou-
ble. To understand why,
take a wildly fanciful trip
with me to two isolated,
side-by-side islands of equal size, Squan-
derville and Thriftville. Land is the only
capital asset on these islands, and their
communities are primitive, needing only
food and producing only food. Work-
ing eight hours a day, in fact, each in-
habitant can produce enough food to
sustain himself or herself. And for a long
time that’s how things go along. On each
island everybody works the prescribed
eight hours a day, which means that each
society is self-sufficient.
Eventually, though, the industrious
citizens of Thriftville decide to do some
serious saving and investing, and they
start to work 16 hours a day. In this mode
they continue to live off the food they
produce in eight hours of work but be-
gin exporting an equal amount to their
one and only trading outlet, Squan-
derville.
The citizens of Squanderville are ec-
static about this turn of events, since
they can now live their lives free from
toil but eat as well as ever. Oh, yes,
there’s a quid pro quo—but to the
Squanders, it seems harmless: All that
the Thrifts want in exchange for their
WA R R E N B U F F E T T
–$100
billion
$0
–$200
–$300
–$400
1950 1960 1970 1980 1990 2000
1950 1960 1970 1980 1990 2000
2003
FORTUNE
estimate
–$500
billion
$0
–$1
trillion
–$1.5
–$2
–$2.5
6/03
FORTUNE
estimate
U.S. TRADE
SURPLUS/DEFICIT
U.S. NET
INTERNATIONAL
INVESTMENT
U.S. holdings of foreign assets
minus foreign holdings of U.S. assets*
Facing up to the effects of our trade imbalance
FORTUNEGRAPHIC/SOURCE:BUREAUOFECONOMICANALYSIS,U.S.DEPARTMENTOFCOMMERCE
*Data for 1976 and later years are not strictly comparable with pre-1976 data.
Truth and consequences
Huge and growing
U.S. trade deficits …
… are inevitably putting
an ever larger slice of
America in foreign hands
3. food is Squanderbonds (which are denominated,
naturally, in Squanderbucks).
Over time Thriftville accumulates an enor-
mous amount of these bonds, which at their core
represent claim checks on the future output of
Squanderville. A few pundits in Squanderville
smell trouble coming. They foresee that for the Squanders both
to eat and to pay off—or simply service—the debt they’re piling
up will eventually require them to work more than eight hours a
day. But the residents of Squanderville are in no mood to listen
to such doomsaying.
Meanwhile, the citizens of Thriftville begin to get nervous.
Just how good, they ask, are the IOUs of a shiftless island? So
the Thrifts change strategy: Though they continue to hold some
bonds, they sell most of them to Squanderville residents for
Squanderbucks and use the proceeds to buy Squanderville
land. And eventually the Thrifts own all of Squanderville.
At that point, the Squanders are forced to deal with an ugly
equation: They must now not only return to working eight
hours a day in order to eat—they have nothing left to trade—but
must also work additional hours to service their debt and pay
Thriftville rent on the land so imprudently sold. In effect, Squan-
derville has been colonized by purchase rather than conquest.
It can be argued, of course, that the present value of the fu-
ture production that Squanderville must forever ship to Thrift-
ville only equates to the production Thriftville initially gave up
and that therefore both have received a fair deal. But since one
generation of Squanders gets the free ride and future generations
pay in perpetuity for it, there are—in economist talk—some
pretty dramatic “intergenerational inequities.”
Let’s think of it in terms of a family: Imagine that I, Warren
Buffett, can get the suppliers of all that I consume in my life-
time to take Buffett family IOUs that are payable, in goods and
services and with interest added, by my descendants. This sce-
nario may be viewed as effecting an even trade between the Buf-
fett family unit and its creditors. But the generations of Buffetts
following me are not likely to applaud the deal (and, heaven for-
bid, may even attempt to welsh on it).
Think again about those islands: Sooner or later the Squan-
derville government, facing ever greater payments to service debt,
would decide to embrace highly inflationary policies—that is, is-
sue more Squanderbucks to dilute the value of each. After all,
the government would reason, those irritating Squanderbonds
are simply claims on specific numbers of Squanderbucks, not on
bucks of specific value. In short, making Squanderbucks less valu-
able would ease the island’s fiscal pain.
That prospect is why I, were I a resident of Thriftville, would
opt for direct ownership of Squanderville land rather than bonds
of the island’s government. Most governments find it much harder
morally to seize foreign-owned property than they do to dilute
the purchasing power of claim checks foreigners hold. Theft by
stealth is preferred to theft by force.
S
o what does all this island hopping have to do with
the U.S.? Simply put, after World War II and up un-
til the early 1970s we operated in the industrious
Thriftville style, regularly selling more abroad than
we purchased. We concurrently invested our surplus
abroad, with the result that our net investment—that is, our hold-
ings of foreign assets less foreign holdings of U.S. assets—in-
creased (under methodology, since revised, that the govern-
ment was then using) from $37 billion in 1950 to $68 billion in
1970. In those days, to sum up, our country’s “net worth,” viewed
in totality, consisted of all the wealth within our borders plus a
modest portion of the wealth in the rest of the world.
Additionally, because the U.S. was in a net ownership position
with respect to the rest of the world, we realized net investment
income that, piled on top of our trade surplus, became a second
source of investable funds. Our fiscal situation was thus similar
to that of an individual who was both saving some of his salary
and reinvesting the dividends from his existing nest egg.
In the late 1970s the trade situation reversed, producing deficits
that initially ran about 1% of GDP. That was hardly serious, par-
ticularly because net investment income remained positive. In-
deed, with the power of compound interest working for us, our
net ownership balance hit its high in 1980 at $360 billion.
Since then, however, it’s been all downhill, with the pace of de-
cline rapidly accelerating in the past five years. Our annual trade
deficit now exceeds 4% of GDP. Equally ominous, the rest of
the world owns a staggering $2.5 trillion more of the U.S. than
we own of other countries. Some of this $2.5 trillion is invested
in claim checks—U.S. bonds, both governmental and private—
and some in such assets as property and equity securities.
In effect, our country has been behaving like an extraordinarily
rich family that possesses an immense farm. In order to consume
4% more than we produce—that’s the trade deficit—we have,
day by day, been both selling pieces of the farm and increasing
the mortgage on what we still own.
To put the $2.5 trillion of net foreign ownership in perspec-
tive, contrast it with the $12 trillion value of publicly owned
U.S. stocks or the equal amount of U.S. residential real estate
or what I would estimate as a grand total of $50 trillion in na-
tional wealth. Those comparisons show that what’s already
been transferred abroad is meaningful—in the area, for exam-
ple, of 5% of our national wealth.
More important, however, is that foreign ownership of our as-
sets will grow at about $500 billion per year at the present
trade-deficit level, which means that the deficit will be adding
about one percentage point annually to foreigners’ net owner-
ship of our national wealth. As that ownership grows, so will the
annual net investment income flowing out of this country. That
will leave us paying ever-increasing dividends and interest to
the world rather than being a net receiver of them, as in the
past. We have entered the world of negative compounding—
goodbye pleasure, hello pain.
We were taught in Economics 101 that countries could not
for long sustain large, ever-growing trade deficits. At a point, so
it was claimed, the spree of the consumption-happy nation would
be braked by currency-rate adjustments and by the unwillingness
of creditor countries to accept an endless flow of IOUs from the
big spenders. And that’s the way it has indeed worked for the rest
of the world, as we can see by the abrupt shutoffs of credit that
many profligate nations have suffered in recent decades.
The U.S., however, enjoys special status. In effect, we can be-
have today as we wish because our past financial behavior was so
exemplary—and because we are so rich. Neither our capacity nor
our intention to pay is questioned, and we continue to have a moun-
tain of desirable assets to trade for consumables. In other words,
Through the spring of 2002, I had lived
nearly 72 years without purchasing
a foreign currency. That has changed.
WA R R E N B U F F E T T
4. our national credit card allows us to charge
truly breathtaking amounts. But that card’s
credit line is not limitless.
The time to halt this trading of assets
for consumables is now, and I have a plan
to suggest for getting it done. My remedy
may sound gimmicky, and in truth it is a tariff called by another
name. But this is a tariff that retains most free-market virtues,
neither protecting specific industries nor punishing specific coun-
tries nor encouraging trade wars. This plan would increase our
exports and might well lead to increased overall world trade. And
it would balance our books without there being a significant de-
cline in the value of the dollar, which I believe is otherwise al-
most certain to occur.
W
e would achieve this balance by issuing what
I will call Import Certificates (ICs) to all U.S.
exporters in an amount equal to the dollar
value of their exports. Each exporter would,
in turn, sell the ICs to parties—either ex-
porters abroad or importers here—wanting to get goods into the
U.S. To import $1 million of goods, for example, an importer
would need ICs that were the byproduct of $1 million of ex-
ports. The inevitable result: trade balance.
Because our exports total about $80 billion a month, ICs
would be issued in huge, equivalent quantities—that is, 80 bil-
lion certificates a month—and would surely trade in an ex-
ceptionally liquid market. Competition would then determine
who among those parties wanting to sell to us would buy the
certificates and how much they would pay. (I visualize that the
certificates would be issued with a short life, possibly of six
months, so that speculators would be discouraged from accu-
mulating them.)
For illustrative purposes, let’s postulate that each IC would sell
for 10 cents—that is, 10 cents per dollar of exports behind them.
Other things being equal, this amount would mean a U.S. pro-
ducer could realize 10% more by selling his goods in the export
market than by selling them domestically, with the extra 10%
coming from his sales of ICs.
In my opinion, many exporters would view this as a reduc-
tion in cost, one that would let them cut the prices of their prod-
ucts in international markets. Commodity-type products would
particularly encourage this kind of be-
havior. If aluminum, for example, was sell-
ing for 66 cents per pound domestically
and ICs were worth 10%, domestic alu-
minum producers could sell for about 60
cents per pound (plus transportation
costs) in foreign markets and still earn
normal margins. In this scenario, the out-
put of the U.S. would become significantly
more competitive and exports would ex-
pand. Along the way, the number of jobs
would grow.
Foreigners selling to us, of course, would
face tougher economics. But that’s a prob-
lem they’re up against no matter what trade
“solution” is adopted—and make no mis-
take, a solution must come. (As Herb Stein
said, “If something cannot go on forever,
it will stop.”) In one way the IC approach
would give countries selling to us great flex-
ibility, since the plan does not penalize any
specific industry or product. In the end, the
free market would determine what would
be sold in the U.S. and who would sell it.
The ICs would determine only the aggre-
gate dollar volume of what was sold.
To see what would happen to imports,
let’s look at a car now entering the U.S. at
a cost to the importer of $20,000. Under
the new plan and the assumption that ICs
sell for 10%, the importer’s cost would rise
to $22,000. If demand for the car was ex-
ceptionally strong, the importer might
manage to pass all of this on to the Amer-
ican consumer. In the usual case, however,
competitive forces would take hold, re-
quiring the foreign manufacturer to absorb
some, if not all, of the $2,000 IC cost.
An ominous fact: The rest of the world
owns a staggering $2.5 trillion more of the
U.S. than we own of other countries.
WA R R E N B U F F E T T
HOW OFTEN HAVE YOU SEEN A COMMENT LIKE THIS IN ARTICLES ABOUT
the U.S. dollar? “Analysts say that what really worries them is that foreigners will
start moving out of the dollar.”
Next time you see something like that, dismiss it. The fact is that foreigners—
as a whole—cannot ditch their dollars. Indeed, because our trade deficit is
constantly putting new dollars into the hands of foreigners, they have to just as
constantly increase their U.S. investments.
It’s true, of course, that the rest of the world can choose which U.S. assets to
hold. They can decide, for example, to sell U.S. bonds to buy U.S. stocks. Or
they can make a move into real estate, as the Japanese did in the 1980s.
Moreover, any of those moves, particularly if they are carried out by anxious
sellers or buyers, can influence the price of the dollar.
But imagine that the Japanese both want to get out of their U.S. real estate
and entirely away from dollar assets. They can’t accomplish that by selling their
real estate to Americans, because they will get paid in dollars. And if they sell
their real estate to non-Americans—say, the French, for euros—the property will
remain in the hands of foreigners. With either kind of sale, the dollar assets held
by the rest of the world will not (except for any concurrent shift in the price of the
dollar) have changed.
The bottom line is that other nations simply can’t disinvest in the U.S. unless
they, as a universe, buy more goods and services from us than we buy from
them. That state of affairs would be called an American trade surplus, and we
don’t have one.
You can dream up some radical plots for changing the situation. For example,
the rest of the world could send the U.S. massive foreign aid that would serve to
offset our trade deficit. But under any realistic view of things, our huge trade
deficit guarantees that the rest of the world must not only hold the American
assets it owns but consistently add to them. And that’s why, of course, our
national net worth is gradually shifting away from our shores.
Why Foreigners
Can’t Ditch Their Dollars