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Imports are real benefits and exports real costs

April 12, 2011

What does Warren mean when he writes:

“He doesn’t seem to grasp the notion that imports are real benefits and exports real costs.”

When you exchange “alter a few bytes in a computer” for something “useful in the real world”, it is a benefit to one side of that trade, and it isn’t the side that gives the useful stuff.

King Midas couldn’t eat anything because everything he touched turned to gold.  As a result, his avarice turned to starvation very quickly – even though he could create what was a valuable asset in unlimited quantities.

In the real world, money is valuable because it eases trade.  But in the end, you cannot use money to do anything practical in the real world.  You cannot build with it, eat it, or engineer with it except in the most extraordinary circumstances, and even then you’ll find better materials just laying around on the ground around you, even in the desert or artic.

Physical Money has no real world benefit – be it paper or computer money.  So when Mosler says that imports are a real benefit, he means that we get to exchange something that isn’t even as useful as hot air for a real world good or service that has use to us.

When we send a few hundred billion video game tokens to China and they give us tables, toys, and auto parts, we’re coming out way way ahead on that trade in the real world.  They get nothing, and we get useful stuff.

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