Peter: My investment advice is rooted in my understanding of economics. It is that understanding that allowed me to accurately forecast the trends of the last decade, and to have positioned my clients in advance to both protect their purchasing power and profit from what has already played out.
Tim: ... Do you think a trade deficit is always bad for a country?
Peter: No. Trade deficits are OK under certain circumstance. 1. An emerging nation imports capital goods necessary to enhance its productivity. 2. A developed nation, with a current account surplus, uses some of its investment income to finance the purchases of additional consumer goods from abroad.
The problem with our deficit is that we import consumer goods we can not afford to pay for with either exports or foreign earnings. As such we accumulate external liabilities that we will never be able to repay and our nation's future productive capacity continues to deteriorate. We are de-industrializing and are condemning ourselves and future generations to falling standards of living.
Tim: Can you elaborate more on the manner in which America is de-industrializing?
Peter: More Americans now work for government than in manufacturing. Most other Americans are employed in retailing, financial and other professional services, healthcare, and education. What we used to produce ourselves we now import. We "pay" for those imports with IOUs (dollars) yet we lack the industrial capacity to ever redeem them with genuine goods.
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