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> "The US doesn't actually do anything with natural resources anymore" ... "we don't "add value" to natural resources"

Not sure that's accurate. The US refines more oil than any other nation.

http://www.hydrocarbons-technology.com/features/featurethe-1...

And is #4 in steel production

https://en.wikipedia.org/wiki/List_of_countries_by_steel_pro...

This seems true for most modern, western economies: they are migrating from a producing economy to a service & knowledge economy. Logistics is big (moving stuff) and services are big (consultancy, lawfirms, etc), but the actual factories are gone. And that makes sense: with higher education levels you can make more complex things than the "regular" factories do. Stuff that requires trained staff - brains.

Oh - and btw: the US likely not only refines most oil, it also consumes it: the US have grown to a country based on consumption, spending and borrowing, but not on producing anything. So if goods only come in and money only goes out, there comes a time where the money is gone. And that is when the trouble starts...

> "but not on producing anything"

That's just not accurate. The US produces and exports a wide variety of petroleum based products and lots of oil as well. We import a lot of heavier oil, because we have the capacity to refine it (unlike most nations) and export a lot of the easier to refine stuff.

http://money.cnn.com/2016/06/06/investing/us-oil-exports-inc...

https://www.eia.gov/todayinenergy/detail.php?id=25532

And, the US industrial output is at its highest point ever.

https://fred.stlouisfed.org/series/INDPRO

I think you need to normalize by population to get a sense for how much, we as a people, are producing.

https://www.wolframalpha.com/input/?i=(industrial+production...

Here the story is that our product has peaked around 2000, and has been doing down ever since.

Except that story would not be true, as it clearly goes up, and has a higher peak after 2000.

Yeah around 2007, but this was relatively short lived.

At the end of the day the perception that economic output is dropping (slope) is valid if you consider it on a per capita basis. Now I'd you consider that the jobs and profits aren'disturbed equally, you can see why Trump won.

But it's not true, the actual factories are still producing, and more than never: http://blogs-images.forbes.com/jonbruner/files/2011/08/value...

> "the US have grown to a country based on consumption, spending and borrowing, but not on producing anything."

Eh, not really. Services and other tertiary industries are just as much "production" as a factory or a mine is. The US government, and US citizens, are not much more indebted than average. You don't "run out of money" by buying foreign goods.

> > "The US doesn't actually do anything with natural resources anymore" ... "we don't "add value" to natural resources"

US #3 oil producer in the world close to Russia and Saudi Arabia

A very distant 4th, though. We consume far more steel than we produce.

But we don't buy those natural resources from other coutries

With the drop in oil prices from the past years, getting oil out of the ground in the US became too expensive. A lot of newly installed sites were closed because they could only operate efficiently with an oil price near $80 a barrel. I am quite sure the US imports a lot of oil...

Edit: quick results from 2015: 25% is imported. https://www.eia.gov/tools/faqs/faq.cfm?id=32&t=6

Isn't that part of why Republicans are pushing for increased exploration/extraction in many of the public lands found in the west/Alaska?

And when resources start running out elsewhere, it will eventually shift back, that isn't necessarily a bad thing.

A lot of oil is imported for the refineries to process.

https://stateimpact.npr.org/texas/2014/10/28/why-is-the-u-s-...

I stand corrected

> The US doesn't actually do anything with natural resources anymore

Per capita, the US manufactures far more goods then it did 40 years ago. It's second only to China.

What that manufacturing does not do is create jobs. Most of it is automated. This is what most people who voted for Trump's economic promises have failed to realize.

> The US doesn't actually do anything with natural resources anymore, we don't make things like steel or plastic etc anymore, or rather, we don't "add value" to natural resources. Instead, with a strong dollar, we let others add the value and (import) buy their finished goods. The few things that we do make become more expensive to others, so our exports decrease. Domestically, there are fewer "manufacturing" jobs.

US manufacturing still makes plenty of stuff: http://www.marketwatch.com/story/us-manufacturing-dead-outpu...

> The US doesn't actually do anything with natural resources anymore

Sure it does, though sometimes in ways that most people don't recognize as doing that, because it doesn't look like 19th century factory production. E.g., Silicon Valley indirectly processes a variety of less-processed materials (e.g., the direct inputs the electricity generation process, among others) into valuable software (and software-enabled) products and services.

Don't forget the hardware. Turning sand into CPUs is a step above turning rocks into steel...

Sure, though that looks a bit more like classical industrial production, and is less likely to be discounted on thearth basis of unfamiliarity, I'd think.

raising import tariffs and a strong US dollar may help cancel out the effects

This ignores the reciprocal actions of our trade partners. You can bet that if we raise tariffs on goods from other countries, those countries are going to do likewise to our goods (populism is all the rage everywhere these days). Along with the strong dollar, US goods will be doubly uncompetitive. Export sectors of the US economy will crash.

USA wins the trade war. We have all the money.

I don't think people really "win" trade wars. My impression is that you only lose less badly.

As with any war, trade wars are "won" to the extent that the ends sought are attained, usually by the political capitulation of the opposing party to end the war, rather than directly by the actions used to fight the war.

Also as with traditional armed conflict, it's rather often the case that neither side achieves a clear and unequivocal realization of its aims and that both claim a vindication unsupported by the concrete outcomes, with serious questions as to whether either achieved anything worth the cost suffered.

It's true that you might win by forcing demands. Trade isn't a zero sum game and requires cooperation so achieving a favorable result via "war" is unlikely. I guess I didn't state it well but even if we "win" we are unlikely to be any better off.

"1. Trump will spend, reduce taxes, increase debt, and therefore US interest rates will have to go up. (This happens whenever a government promises to spend a lot on infrastructure improvements.)"

Yes - all else being equal ...

However, consider that if Europe goes over the brink and China has a serious property (or other) bust the flight to safety could push US interest rates even lower than they have been.

Looks like the U.S's manufacturing output is #2 in the world, only behind China.

http://www.aei.org/publication/charts-of-the-day-world-manuf...

I wonder if that first chart is inflation adjusted. I suspect it's not.

> I wonder if that first chart is inflation adjusted. I suspect it's not.

That chart (and subsequent text) quite clearly says "current US dollars," which is presumably 2012 dollars given the date of publication. So yes, it is inflation adjusted.

https://fred.stlouisfed.org/series/OUTMS

Shows flattening of growth from 2012 to 2016. This chart shows "real" output.

I could be misiterpreting but is it that that "current" dollars adjusts for currency inflation, while "real" dollars adjusts for price-of-goods inflation. Or are they basically the same type of adjustment?

https://datahelpdesk.worldbank.org/knowledgebase/articles/11...

This happens whenever a government promises to spend a lot on infrastructure improvements.

People keep assuming because Trump said he'd spend on infrastructure that it will happen. Congress is the only entity that can authorize spending, and those in Congress with the power said it is very low on their priority list.

Sure, maybe Trump will make a deal with the House or Senate majority leader, but it seems to me unless something unusual happens, there won't be significant increase in spending on infrastructure.

3. Move towards market protection "Japanese Auto Manufacturer Style" by providing tax and other incentives to corporations in exchange for not outsourcing the jobs - this already happened with Carrier. Potentially harsher measures like tariffs will be implemented as well to some extent.

> 1. Trump will spend, reduce taxes, increase debt, and therefore US interest rates will have to go up.

Can the FED not just print money and buy all the bonds keeping interest rates low?

They already did that for several years with QE. They de facto reduced the outstanding US debt by several trillion. You could argue for more monetary stimulus but it's hard to get away with it now that they are very close to reaching their inflation target. Obviously the US and other advanced economies have suffered through a very long period of low inflation so they are in a unique position in history where they could print quite a bit of money and not end up like Zimbabwe or Venezuela.

It started lightly, but became appalling during the first Bush administration (into Clinton, second Bush and Obama and soon Trump). It just got called QE when it became a tool to buffer against the inevitable failing industries. The report that was published detailing, the reserve's manipulation, stopped being issued in the 90's. I can't seem to find out if that information is now published somewhere else. I assume so.

> suffered through a very long period of low inflation

Why do you say "suffered?" For my personal finances, low/no inflation seems like a very good thing. My saved money doesn't decrease in value.

The negative effects of low inflation are well documented. You can see Japan as an example. Low inflation has perverse incentives that hamper employment and econmic growth. Essentially low inflation is good for the consumer until they lose their job.

> They de facto reduced the outstanding US debt by several trillion.

How does printing money to buy government bonds reduce the debt?

It does if you give all of the interests paid on that debt back to the government like the Federal Reserve does.

That's the interest payments, what about the debt itself?

They buy the bonds and the money goes where? Somewhere that then spends it. Thereby raising inflation. If you're proposing they print the money and then do nothing with it, I'm curious what the point of that would be.

Isn't that exactly what happened for the most part, the Fed printed a whole bunch of money and gave it to the banks to lend, the banks just sat on it and collected interest? (Not exactly what happened but reasonably correct from what I've read).

Ok the economist is a rag. 1) Interest rates are endogenous. If we don't want them to go up, the fed can decide not to raise them.

2) A strong dollar improves our real terms of trade meaning we can actually have more stuff for the same unit. We get a higher real standard of living.

Who is checking the fact checkers?

I don't understand this comment. The Economist was founded as a free trade advocate about 150 years ago and is hardly opposed to trade!

The article clearly says the fed can raise interest rates or not as it wishes.

The article doesn't disagree with your point 2 (I agree with it too) it just talks about domestic political issues related to this factor.

We don't get a higher standard of living. We're able to buy more stuff per unit, that's true. But, our trading partners buy less stuff per unit. This is very important given that we live in a global economy, and that's not going to change. So we're selling less stuff, meaning that companies make less money. Companies making less money produce less stuff or send jobs overseas to try and bring costs down. That means they're employing fewer US workers.

This effect is compounded by the fact that our companies are competing against companies from other nations, whose goods are now cheaper to buy, making them more attractive than US goods.