Can someone please explain this about the USA economy?

Question

The American culture is all about buying, buying, and buying. We need to get stuff, and then more stuff.

But the USA doesn't produce anything. Everything is from China, everything is made in some foreign nation. I don't have anything made in the USA. My car, my clothes, my appliances, everything was made in some foreign nation.

I'm not an Economics major, but it just doesn't make sense.

How can a country that barely produces anything keep buying, buying, and buying stuff from other countries?

Answer 1

You are wrong. Many things are made in the USA. Manufacturing output in the US is currently greater than it has ever been before. People commonly think this is not the case, but they're wrong.



YOUR car may not have been made in the US, but the majority of cars sold in the US *are* made in the US. That includes foreign brands such as Honda and Mercedes and BMW ... most foreign brands have plants here in the US where they manufacture cars.



As a general rule, cheap things and many types of electronics are made in Asia. That's the only things you notice and are aware of, which is the cause of your misconceptions. More valuable things however are made in the US -- cars, airplanes, complex machinery, farming equipment, not to mention things like chemicals and medical equipment.



Stuff imported from China accounts for only about 3% of the US economy. So it's obviously not even remotely true everything is made in China.



You need to keep in mind, there are literally billions of different products and services sold in the US. You are totally unaware of 99.9% of them. When you look around and see 5 or 6 things that you think are made in China, that represents a absurdly miniscule amount of economic product. You cannot extrapolate from your very limited, anecdotal experience without knowing a lot more about how our economy works.

Answer 2

The US economy consists of about 80% services. This imbalance has created a huge trade deficit (imports exceeds exports ) which, require financing from foreigners for the trade deficit to continue. As long as foreigners continue to buy US IOU's to finance the trade deficit, The US can continue to consume and not produce much.



However, once the debt reaches an unsustainable level, like now, foreigners become reluctant to lend money (just like a bank will with a over indebted person) and the US Dollar must lose significant value to decrease the trade deficit (exports>imports)



At the end, this buying is mostly all on debt financed by foreigners.

Answer 3

Incidentally, I am an economics major.



For foreign exchanges to run smoothly, some sort of counting standard has to be used. It happens to be the U.S. dollar, most of the time.



What this means is that foreign governments and individuals and corporations in foreign countries hold on to a lot of U.S. dollars. and they use them in their transactions. An important effect of this is that most dollars find themselves outside of the U.S. proper where they are being used as a sort of standard world currency.



Part of this is for good reasons: There is confidence in the U.S. dollar, otherwise, people would begin dumping them.



But is America becoming a paper tiger?

A lot of good stuff is still produced in the U.S. and some quality edge remains.



Furthermore, some countries are begining to contest a system that is partly based in international institution, which uses the American dollar. These countries are (officially): Brazil, Russia, India, China and South Africa. It's called the BRIC (South Af. Is a later addition). They are making serious plans to have their own currency system, separate from the dollar. The U.S. is not invited to BRIC meetings as it's invited to all other World Summit wathever thingy.



But you're right, the consummerist thing won't work eternally. I'm sorry, but why focus so much on homo economicus? He is still just a fiction. Are people truly insatiable or is that education? This is still an important question to ponder, in my opinion.

Answer 4

The output of a nation is measured by the Gross Domestic Product. This is the total value of the goods and services produced in that country. While many goods are manufactured in other countries today, many of the steps in the process of designing and creating a product, marketing it, providing the retail infrastructure to make it available to you in a convenient location with a sales person who can explain it's uses and benefits vs other options, are still performed in the united states. As such, the value of the goods you buy from an American company, such as Black and Decker tools for instance, may have a substantial portion of their value created in the US, with only the actual manufacture and assembly done in China. This means that while you may be paying $40 for a circular saw in a store in the US, the portion of that cost that is paid to Chinese firms and Chinese workers is much less, perhaps just a few dollars in some cases.



On the flip side, your foreign car may have been manufactured in the united states by a company employing american workers. New cars now have a designation of the percent of the vehicle manufactured in the US. I notice a KIA recently that had 60% american parts and/or labor.

Answer 5

China and Brazil are transforming into up because of the fact they are socialist governments. the USA and japan are breaking down because of the fact theyre capitalist international locations run by making use of corrupt politicians who're basically exciting in fulfiling the needs of the richest a million%. for sure to make certain that the richest a million% to benefit, the relax ninety 9% might desire to make sacrifices. after 3 hundred years of savage capitalism, 2/3 of the international lives in poverty.

Answer 6

During Democrat control of Congress, we screwed up by:



a) Letting them increase minimum wage standards---that alone was sure to bless, allow and create the rampant price gouging we today see going on.



b) Allowing the Democrats to damage the once strong tobacco economic market. The decades old anti-smoking movement has successfully weakened this particular corporate power house---another reason for all the rampant price gouging w/ NO control of it in sight.



c) Allowed Democrats to handle / broker U.S. corporate OUTSOURCING to other countries.



d) Allowed Democrats to allow loose security along U.S. / Mexico borders by restricting U.S. Border Patrol budgets. The 10 year flood of illegal Mexican residents in the U.S. has made it to where we can't really afford a "Made In America" economy anymore.



We're pretty much mired stuck into "cheaper" outsource labor and market goods sales.

Answer 7

we do produce a lot, but it is true that we have a massive trade deficit



it is the inflationary currency we use that leads to a tendency to spend now instead of save, there is little point of saving $100 when it will be worth less and less over time



to end this we need to end the cycle of debt the federal reserve system causes

Answer 8

We'll lets put this way. If you lost your job ... you could still live the same life style that you have become accustomed too for a while. As long as you keep living off borrowed money. This will work until your creditors wise up and demand to be paid.

Answer 9

Look at monthly expenses of your family, and see what % goes to China.



Do you pay rent or mortgage to a Chinese company?

How much of your food comes from China?

How about games you play or movies you watch?

Are you internet, cell phone service and cable TV provided by Chinese?

Sure, you cell phone might have been assembled in China, 75% of its price went to americans who developed and sold it to you.