One thing I found interesting in this chapter was how much bigger of a percentage imports are to this country’s GDP compared to exports. I know we import much more from China than we export to them, but I guess I just thought that we were also exporting a lot more to other countries than they import from us. This is clearly not the case; as Figure 1 shows, imports have essentially mirrored exports for about the past 15 years, which tells me when that when the U.S. exports something, an import into the country is part of that same deal except on a much bigger scale, which is why we see that import number getting bigger.
Another thing I found interesting was the different factors in history that have contributed to the country’s “debt.” It’s not as simple as pointing out one thing that could have caused trade deficit; there may have been certain things to trigger it like President Ronald Regan’s defense spending, a boom where companies were investing, and a decrease in both saving and investment, but there’s many other factors that have played a role in this debt. Even within the economic events that triggered it, there are even more economic events within those to consider, which is one of the things that can make the economy so complex to understand: there’s so many layers.
A third thing I found interesting in this chapter was the purchasing-power parity because this is something I’ve had to learn about since a very young age. When I would travel to Mexico I would ask why we paid so many Pesos for everything, and I was always explained that a peso is worth far less than a dollar. Of course, once I got old enough to understand this concept, I realized many things in Mexico are actually cheaper in Mexico because of the amount of Pesos I can get with a dollar. One other reason I’ve learned this parity isn’t accurate is because of the wages paid in those countries; it may seem to us that they’re just really cheap places to live, but when you actually live there the wages are very low and that’s why there’s so much poverty.
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