There's always the real income, the probably is usually just the price rigidity! Most rich economies have no problem with this (the US and the EU can just adjust interest rates, which are comfortably above zero, to accommodate trade balances). Ironically, China is the biggest culprit here: their interest rates are way, way too high given their inflation and unemployment. This is unfortunate, it'd cause a lot less political disturbance if they lowered it, but as a practical economic matter, not a concern to the US / EU. Drop trade barriers, lower interest rates, and everyone will be richer and have a job.
There can’t be or China et al wouldn’t be selling their stuff for mere promises.
People don’t swap bananas for apples. They sell them for money, and money is retained for its own benefit. Failing to treat money as its own exchange product is the problem.
The world is not run by interest rates. It’s run by monetary flow, retained in its own right for insurance, status and mercantile purposes.
Every day I sell my stuff for promises of being able to get stuff for free tomorrow. It so happens that China has a ferociously large savings rate as a consequence of a terrible social safety net - there's a lot on the literature of this, Brad Setser is a good person to read regarding this.
> There can’t be or China et al wouldn’t be selling their stuff for mere promises.
But they are, since those aren't capitalist democracies China can do things that doesn't benefit its people short term but continues to move investments and industries there long term.
There's always the real income, the probably is usually just the price rigidity! Most rich economies have no problem with this (the US and the EU can just adjust interest rates, which are comfortably above zero, to accommodate trade balances). Ironically, China is the biggest culprit here: their interest rates are way, way too high given their inflation and unemployment. This is unfortunate, it'd cause a lot less political disturbance if they lowered it, but as a practical economic matter, not a concern to the US / EU. Drop trade barriers, lower interest rates, and everyone will be richer and have a job.