The lower cost of imported goods is not a net gain to the consumer, as the PR would have us believe, when the revenues from those products accrue to foreign interests.
GDP is the product of money times the turnover rate, the number of times money turns over in a given time span, call it a multiple. When the revenue goes overseas, that multiple in our GDP becomes negative and thus the product becomes negative thus reducing our own GDP. The loss to our economy is multiple times greater than the fifty or so billion a month trade defficit. This loss represents a far greater loss to the individual consumer than the small savings from lower priced products imported from China and sold at Walmart and elsewhere, yet there remains a short term imperative to buy these products.
This is economics 101, but politicians haven't a clue. The investment banks do, however. Some but not all of that lost product, revenue, economic activity thus profit in China and elsewhere, comes back to our bankers as investment seeking a safe haven, thus syphoning lost wealth from US consumers back into the hands of wealthy Chinese and as profit and salaries for our investment banks and wealthy bankers, the so called one percent, all eager to provide newly fabricated highly leveraged investment products to exploit the opportunity.
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