So We Think Argentina Is A Mess?

[vagabundo]

Sure, having a large population does mean a large balance.

Now let's look at per capita:

Norway: ..... Population: ... 4722701 account balance:. $ 76100000000 = 16 113 /person
Saudi Arabia: Population: .. 26939583 account balance: $ 150000000000 == 5 568/person
Sweden: ..... Population: ... 9119423 account balance:. $ 37560000000 == 4 118 /person
Denmark: .... Population: ... 5556452 account balance:. $ 18600000000 == 3 347/person
Germany: .... Population: .. 81147265 account balance: $ 208100000000 == 2 564 /person
Japan: ...... Population: . 127253075 account balance:. $ 84700000000 ==== 665/person
Russia: ..... Population: . 142500482 account balance:. $ 85060000000 ==== 596/person
China: ...... Population:. 1349585838 account balance: $ 170800000000 ==== 126/person
India: ...... Population:. 1220800359 account balance: $ -80150000000 ==== -65/person
USA: ........ Population:.. 316668567 account balance:$ -487200000000 = -1 538/person

Now this is interesting. and a good point.

 

[expatinowncountry]

Why on earth I should care about absolute current account balances? Per capita terms is an improvement but what matter is to measure it with respect to the size of the economy. Everyone with knowledge of econ 101 knows that we measure Current Account Balance over GDP !! Some of the genetic superior people seem to not understand this. I really do not know why I am answering a post by vagabundo on genetics but it hurts to my eyes to see mixing (bad) economic analysis with genetics.

Also, what matters really is the fundamentals behind the current account balance. A negative or positive current account balance is not good or bad per se. If you run for ever a surplus it means that you are consuming always less than your income (lending to the rest of the world). Some countries run surpluses for many years because they have to pay old debts (past current account deficits), because their economy main resource is exhaustible (think Saudi Arabia, they are now saving because in the future will not have oil and need to live from the accumulated savings=Current account surpluses), because of demographics (relatively young population that needs to save for retirement), or because of bad policies. The same reasons apply to countries that run deficits for many years.

So what matters is what is behind the surpluses or deficits and whether they are sustainable over time. Arguably the US has been running deficits for many years and we are all worry that it has been for way too long. They have been able to do that among other reasons because of the appetite for US dollars or US Treasury bills. If that appetite changes, the US may have to adjust their economy a lot what would have very bad consequences for everyone else.

 

[Joe]

you are 100% correct and most ppl will glance over your comment because they do not fully understand what it means to have the world's reserve currency. it means that the US has lived off the backs of slave labor in order to enjoy cheap goods for decades. the US exports its inflation to other central banks who store dollars as their reserves, creating an artifical demand.

the US prints from nothing what every other country in the world needs to compete in order to obtain to buy not only energy but every commodity in the world. and they back it up with an annual military budget of $1 trillion, more money than all other nations on earth combined. try selling your oil in euros or any other non dollar denominated currency and you will be ousted as a leader. just ask sadam husein.

getting back to the cia fact book, this explains why the US has the largest account deficit.

I would agree with you that the US military empire is vile, especially some aspects like drone warfare.

On the other hand, nobody forces other countries to build up large dollar reserves. They do so because they want to export their manufactures to the US. It's a myth that because petrol is priced in dollars that the transactions must take place in dollars - there's a little old thing called the foreign exchange market.

 

[John.St]

Those reserves are now only US$ but all kinds of foreign currency.

If you add the figures for the few countries in (my) very short list, you'll notice that they have reserves of 1.6 times the US negative balance.

As a matter of fact, the balance tells you for how long and how much per year a country can allow itself to run a deficit yet not being in debt.

 

[EricLovesBA]

...
It's a myth that because petrol is priced in dollars that the transactions must take place in dollars - there's a little old thing called the foreign exchange market.

It was my understanding that oil is not simply "priced" in dollar terms, but that the "agreement" (coercion) is that all oil purchases are actually settled in dollars, as described here:

http://www.financialsense.com/contributors/jerry-robinson/the-rise-of-the-petrodollar-system-dollars-for-oil

While this doesn't necessarily obligate countries to keep their national reserves in dollars, it does obligate them to either have dollars on hand or to purchase them as part of the transaction, for arguably the most important world resource, thereby creating an artificial demand.
OPEC's sales to the tune of around $1T per year or so?
http://www.eia.gov/countries/regions-topics.cfm?fips=OPEC

The first article states they purchase US bonds as part of the deal too. If this demand disappears, wouldn't an inflationary spiral be expected? Or am I missing/not understanding something?

 

[Joe]

Dollar no longer primary oil currency as China begins to sell oil using Yuan

http://www.examiner.com/article/dollar-no-longer-primary-oil-currency-as-china-begins-to-sell-oil-using-yuan

With the troubles in Europe, the death of the dollar as the primary oil currency has been granted a reprieve for years. But the death is just postponed.