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There has been a lot of talk about "exporting jobs": the process of buying goods from other countries causes the U.S. to lose jobs. Some say that this is not a bad thing; that because this increases our standard of living and makes goods cheaper, we don't need as many jobs anyway.

This is a very dangerous way to look at the situation, mainly because it doesn't describe the whole problem.

Let's say this country makes the best chairs in the world, but we can't make anything else very well. So the world adapts to buy all their chairs from us and we adapt in exchange to buy everything else from them.

In this case all seems well, at least while the rest of the world wants our chairs. We have plenty of jobs making chairs and we can efficiently get all else that we need from the rest of the world.

But what if all a sudden someone else in the world begins to make better chairs? We would have to find some other way to get our stuff from the rest of the world.

By looking at this extreme example the problem becomes evident. Once we marginally begin to lose the ability to produce goods or services that other people want, we must replace an exchange of goods with an exchange of capital: we must borrow from the rest of the world to buy our stuff.

This situation is what Steve Roach at Morgan Stanley is nervous about: the U.S. must borrow from the rest of the world in order to get the stuff we need. Right now the rest of the world owns a trillion dollars of U.S. government debt, not to mention some probably similar amount of private debt.

This can last for a while, but we must understand that the world probably does not have an infinite appetite for our debt. At some point we must begin exporting something else besides capital. This requires a much lower dollar to stimulate savings, which is used for investment, which will be used to produce actual stuff the rest of the world will accept for trade.

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