[tatefegley]

Here is how I understand it (and I’m sure Dr. Herbener will correct me):

International trade is made of two parts: the current account and the capital account. The current account consists of goods and services, the capital account consists of capital. A current account deficit (which the US has) implies a capital account surplus.

Treasuries are not traded directly for imports, but government deficits can contribute to the current account deficit.

When the government has fiscal deficits, it sells treasury bonds. Many of these bonds are bought by foreigners and foreign governments. These governments pay for these treasuries with US dollars. Where do they get these dollars? They obtain them by selling goods and services to Americans (or tax those who do). Thus, instead of buying American goods or services, they buy US treasuries, which goes to funding government employees, transfer payments, wars, etc. (and some of it then might be spent on imports).

In national accounting terms, there is total savings (TS) = private savings + public saving. In the US, there is no public saving; it is negative, which decreases TS. The demand for loanable funds (which is supplied by total savings) cannot be fully met by domestic saving. This tends to lead to higher interest rates and foreigners investing their savings in the US (of course, the Fed affects this whole scenario as well). Ceteris peribis, foreigners investing their savings in the US will increase the capital account surplus, and thus increase the current account deficit.

[tatefegley]

I don’t think they are contradictory. The latter source must just classify both goods and services in their calculations of “imports” and “exports.”

[tatefegley]

Yes, thank you. I suppose my follow-up question would be whether most of the proponents of the Constitution believed the propaganda they were giving to defend it. It seems that some libertarian circles speak quite highly of the Constitution while others say that tyranny in installments was the original goal.

I will also copy and paste a question that seemed to have gotten overlooked in the topic titled, “Articles of Confederation.”

“I recently watched Sheldon Richman’s lecture, “Articles of Confederation versus the Constitution,” (http://youtu.be/rrC5lRY4Kr8) and he makes a variety of claims about which I would like to get your opinion.

The first is that one of the major impetuses for creating the Constitution was that those who were privileged under British rule wanted to regain that status by centralizing power. I’m only familiar with the standard explanation that the Articles came up short in terms of being unable to deal with trade barriers between the States at the federal level and in a lack of power to tax.

Secondly, he argues that the federal income tax was always constitutional, according to its language (though it seems strange that if that is the case that Congress would go through the trouble of amending the Constitution).

Thirdly, there was a provision in the Articles (Article II, I believe) that was similar in language to the 10th Amendment, but the changing of some key words (“reserved” instead of “retained”, and the lack of the modifier, “expressly”) was an attempt to water down the amendment, so much so that it doesn’t substantively change the Constitution.

Lastly, he argues that the language of the commerce clause (“among the several States”) doesn’t necessarily mean only interstate commerce but could include commerce between residents of the same state. As well, he criticizes the view that when it was written, “regulate” meant to “keep regular” rather than the modern definition of completely dictating all possible aspects remotely relating to commerce.

Clearly, if what Richman says is true, it is very difficult to celebrate the US Constitution as an attempt to limit government.”

[tatefegley]

Well, I just watched the lecture, “The Constitution Movement,” and that seemed to answer who the primary movers were for the abandonment of the Articles and some reasons why they desired to do so. But I feel like it hasn’t fully been explained why a new constitution was necessary, if the largest problem was lack of revenue (especially since the Articles had gotten them through a war).

I will intently listen to the subsequent lectures and look forward to responses.

[tatefegley]

I recently watched Sheldon Richman’s lecture, “Articles of Confederation versus the Constitution,” (http://youtu.be/rrC5lRY4Kr8) and he makes a variety of claims about which I would like to get your opinion.

The first is that one of the major impetuses for creating the Constitution was that those who were privileged under British rule wanted to regain that status by centralizing power. I’m only familiar with the standard explanation that the Articles came up short in terms of being unable to deal with trade barriers between the States at the federal level and in a lack of power to tax.

Secondly, he argues that the federal income tax was always constitutional, according to its language (though it seems strange that if that is the case that Congress would go through the trouble of amending the Constitution).

Thirdly, there was a provision in the Articles (Article II, I believe) that was similar in language to the 10th Amendment, but the changing of some key words (“reserved” instead of “retained”, and the lack of the modifier, “expressly”) was an attempt to water down the amendment, so much so that it doesn’t substantively change the Constitution.

Lastly, he argues that the language of the commerce clause (“among the several States”) doesn’t necessarily mean only interstate commerce but could include commerce between residents of the same state. As well, he criticizes the view that when it was written, “regulate” meant to “keep regular” rather than the modern definition of completely dictating all possible aspects remotely relating to commerce.

Clearly, if what Richman says is true, it is very difficult to celebrate the US Constitution as an attempt to limit government.

[tatefegley]

I’m having a little trouble understanding the first part of the second sentence (“If money’s purchasing power is falling because of increased production of goods,”). I was under the impression that increased production of goods would increase money’s purchasing power.

And in the third sentence, “So even if wages for labor services decline during economic progress,” we are talking in nominal terms, correct? So, in terms of paying for services that can’t currently be replaced by capital goods (such as massages), we would see a decrease in the monetary price but an increase in the real price of the service?

[tatefegley]

Thank you very much!

[tatefegley]

I suppose I was only referring to the commonly held belief that during a bust that lower demand for consumer goods will cause prices of goods to decrease, which will lead to layoffs of labor, which will then lead to even lower demand, and so on.

[tatefegley]

Forgive me if this question was already answered elsewhere (or something I should have readily gleaned from the lectures), but I am wondering how libertarian the original intentions of the Framers of the US Constitution were. Upon hearing how some constitutionalists speak today, one would think that the only reason that the federal government is now so large is that the Supreme Court has misinterpreted certain clauses and everything would be swell if the federal government could only go back to a strict constructionist reading, as the Framers intended. Others, however, are much more cynical about the Framers intentions; asserting that Federalists like Alexander Hamilton wanted a strong central government to be snuck in through methods similar to those which have actually been used. Which story is closer to the truth?

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