Ars Regendi Simulation Forum

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thepresidentmaN

Alright, I think I finally understand, and thank you Titian and Helsworth for the informative replies!. I think I will Rapidly cut defence spending to very tiny ammounts so I can cut taxes more. Then cut capital and aquisition taxes. Leave excise where it is. Cut tariffs to near nothing. Then reduce my currency's strength slightly but not too much, and answer relevant tasks.

thepresidentmaN Wrote:
Alright, I think I finally understand, and thank you Titian and Helsworth for the informative replies!. I think I will Rapidly cut defence spending to very tiny ammounts so I can cut taxes more. Then cut capital and aquisition taxes. Leave excise where it is. Cut tariffs to near nothing. Then reduce my currency's strength slightly but not too much, and answer relevant tasks.

I actually want to cut my huge commercial surplus because it's hurting the private sector. My foreign sector (X-M) is running a surplus of around 4 trillion dollars. My budget deficit is around 2,5 trillion. The rest of that deficit is kept by the private sector, leveraging itself. I know I won't likely be able to increase imports to solve this problem - so I think I'm going to implement Anarcho-syndicalism.
Most likely you'll encounter this situation yourself as your state gets older. It's always better to have balanced trade. One is not sending net wealth out into the world in exchange for savings in foreign currency. Wink

thepresidentmaN

Helsworth Wrote:

thepresidentmaN Wrote:
Alright, I think I finally understand, and thank you Titian and Helsworth for the informative replies!. I think I will Rapidly cut defence spending to very tiny ammounts so I can cut taxes more. Then cut capital and aquisition taxes. Leave excise where it is. Cut tariffs to near nothing. Then reduce my currency's strength slightly but not too much, and answer relevant tasks.

I actually want to cut my huge commercial surplus because it's hurting the private sector. My foreign sector (X-M) is running a surplus of around 4 trillion dollars. My budget deficit is around 2,5 trillion. The rest of that deficit is kept by the private sector, leveraging itself. I know I won't likely be able to increase imports to solve this problem - so I think I'm going to implement Anarcho-syndicalism.
Most likely you'll encounter this situation yourself as your state gets older. It's always better to have balanced trade. One is not sending net wealth out into the world in exchange for savings in foreign currency. Wink


You are probably right when you say balanced trade is the best. I should probably only run small trade surpluses to make sure imports and exports stay in balance.

chad7405

Helsworth Wrote:
I actually want to cut my huge commercial surplus because it's hurting the private sector. My foreign sector (X-M) is running a surplus of around 4 trillion dollars. My budget deficit is around 2,5 trillion. The rest of that deficit is kept by the private sector, leveraging itself. I know I won't likely be able to increase imports to solve this problem - so I think I'm going to implement Anarcho-syndicalism.
Most likely you'll encounter this situation yourself as your state gets older. It's always better to have balanced trade. One is not sending net wealth out into the world in exchange for savings in foreign currency. Wink

I have had a huge trade surplus for several years now because of protectionism...Baseball I'm going to try to lower tariffs over the next couple winters to try to get more imports and exports, but what is the benefit of balanced trade like you mentioned in this above post, it seems like favorable balances of trade would be goodDaumen2, why is that bad?Kopfkratz

thepresidentmaN

From my limited understanding a huge trade surplus creates a couple of smaller negative factors that combine into a larger negative factor. The first negative thing is, you rely on foreign countries to consume your goods and if they stop consuming them it brings your whole economy into a recession due to income from exports being slashed. In such a case you would have to increase local consumption to combat that recession. Instead, keeping imports close to your exports fills in that consumption gap and curbs your reliance on exports. When you import goods close to what you export you fully utilize your buying potential and redistribute your profits back to your trade partners which will help both of you grow and increase trade with eachother. Don't quote me on this though. Helsworth or Titian can probably explain it better.

chad7405

thepresidentmaN Wrote:
From my limited understanding a huge trade surplus creates a couple of smaller negative factors that combine into a larger negative factor. The first negative thing is, you rely on foreign countries to consume your goods and if they stop consuming them it brings your whole economy into a recession due to income from exports being slashed. In such a case you would have to increase local consumption to combat that recession. Instead, keeping imports close to your exports fills in that consumption gap and curbs your reliance on exports. When you import goods close to what you export you fully utilize your buying potential and redistribute your profits back to your trade partners which will help both of you grow and increase trade with eachother. Don't quote me on this though. Helsworth or Titian can probably explain it better.

Thanks, I figured it had something to do with that on a macro level, never gain too much dependency, foreigners will become a large part of domestic economy which isn't good, etc. But I'm waiting for a classic Helsworth response of something along the lines of "Based on this economic theory... This is why it's bad" as in a real financial phenomenon vs. the "speculation" of losing your exports and plunging into recession.Kaffe26x18

Well, I wouldn't be too concerned with it, if the Ars-Regendi simulation didn't turn the virtual populace really angry once a certain arbitrary debt to GDP ratio is reached.

But now, concerning trade surpluses in real life. For developing countries it is a MUST have. Because it ensures their ability to buy things which they can't otherwise buy - things they need but don't produce domestically. Things like fuel and resources, special medication, capital goods (machinery and tools) etc.
Of course, every net exporter of goods is a net importer of aggregate demand. Without aggregate demand there's no selling the things produced, so there's no actual production being done.

Thus, one is either creating domestic aggregate demand or is importing it from somewhere else. Certainly you guys are familiar with the fucked up religious thinking of the orthodox establishment within the national and transnational political arenas. What do they and the IMF preach? Increase taxes, slash spending! But how will I be able to pay my IMF loans? Well, says the criminal in suit and tie, focus on increasing exports. Namely, give your net wealth to other parts of the world in exchange for fucking money with which to extinguish external debts, that were contracted most likely because of fallacious ideological thinking and corrupt purposes (political bribes being given by transcorporate interests).

What we produce domestically, plus what the rest of the world sends us, minus what we send to them equals our net wealth. So if you're a developed country, it's not worth having so much net exports - sending so much net wealth away. When you could render your population to consume that wealth. The real reason why we export, is to be able to import what we can't produce at home.

Of course, the USA in real life has a special status in traderelations. Everyone wants to sell its stuff to them in exchange for paper dollars. The US is NOT indebting itself in foreign currency. China's dollar reserves are staying at a special account within the Federal Reserve. And the chinese can only use it in operations within the private banking system. That money does not leave the country.

For every other country, however, the situation is different. In order to import/buy from country A, you need that country's currency. So what are you gonna do? You go to a bank and give it, say, 100 units of your own country's currency (we'll call them country B money). The bank goes on the fx market, and searches for another party or parties that is/are willing to trade 100 B money for 100 A money.
Once you obtained that foreign currency, you can pay the respective manufacturers in country A with country A money, and now you can import the respective goods.

(S-I)=(savings minus investment)=private sector
(G-T)=(government spending minus taxation)=government sector
(X-M)=(exports minus imports)=foreign sector
All 3 of these sectors cannot be in a situation of surplus at the same time. Someone needs to run the deficit, so the others can be in surplus. And the only one able to do this without going bankrupt is the government.
Naturally, the AR game simulation does not reflect the sectoral balance identity within its simulation. Still, this game is the best you'll find on the internet.

chad7405

Helsworth Wrote:
Well, I wouldn't be too concerned with it, if the Ars-Regendi simulation didn't turn the virtual populace really angry once a certain arbitrary debt to GDP ratio is reached.

But now, concerning trade surpluses in real life. For developing countries it is a MUST have. Because it ensures their ability to buy things which they can't otherwise buy - things they need but don't produce domestically. Things like fuel and resources, special medication, capital goods (machinery and tools) etc.
Of course, every net exporter of goods is a net importer of aggregate demand. Without aggregate demand there's no selling the things produced, so there's no actual production being done.

Thus, one is either creating domestic aggregate demand or is importing it from somewhere else. Certainly you guys are familiar with the fucked up religious thinking of the orthodox establishment within the national and transnational political arenas. What do they and the IMF preach? Increase taxes, slash spending! But how will I be able to pay my IMF loans? Well, says the criminal in suit and tie, focus on increasing exports. Namely, give your net wealth to other parts of the world in exchange for fucking money with which to extinguish external debts, that were contracted most likely because of fallacious ideological thinking and corrupt purposes (political bribes being given by transcorporate interests).

What we produce domestically, plus what the rest of the world sends us, minus what we send to them equals our net wealth. So if you're a developed country, it's not worth having so much net exports - sending so much net wealth away. When you could render your population to consume that wealth. The real reason why we export, is to be able to import what we can't produce at home.

Of course, the USA in real life has a special status in traderelations. Everyone wants to sell its stuff to them in exchange for paper dollars. The US is NOT indebting itself in foreign currency. China's dollar reserves are staying at a special account within the Federal Reserve. And the chinese can only use it in operations within the private banking system. That money does not leave the country.

For every other country, however, the situation is different. In order to import/buy from country A, you need that country's currency. So what are you gonna do? You go to a bank and give it, say, 100 units of your own country's currency (we'll call them country B money). The bank goes on the fx market, and searches for another party or parties that is/are willing to trade 100 B money for 100 A money.
Once you obtained that foreign currency, you can pay the respective manufacturers in country A with country A money, and now you can import the respective goods.

(S-I)=(savings minus investment)=private sector
(G-T)=(government spending minus taxation)=government sector
(X-M)=(exports minus imports)=foreign sector
All 3 of these sectors cannot be in a situation of surplus at the same time. Someone needs to run the deficit, so the others can be in surplus. And the only one able to do this without going bankrupt is the government.
Naturally, the AR game simulation does not reflect the sectoral balance identity within its simulation. Still, this game is the best you'll find on the internet.

Cool, thanks for the help! Wertung

thepresidentmaN

Helsworth Wrote:
Well, I wouldn't be too concerned with it, if the Ars-Regendi simulation didn't turn the virtual populace really angry once a certain arbitrary debt to GDP ratio is reached.

But now, concerning trade surpluses in real life. For developing countries it is a MUST have. Because it ensures their ability to buy things which they can't otherwise buy - things they need but don't produce domestically. Things like fuel and resources, special medication, capital goods (machinery and tools) etc.
Of course, every net exporter of goods is a net importer of aggregate demand. Without aggregate demand there's no selling the things produced, so there's no actual production being done.

Thus, one is either creating domestic aggregate demand or is importing it from somewhere else. Certainly you guys are familiar with the fucked up religious thinking of the orthodox establishment within the national and transnational political arenas. What do they and the IMF preach? Increase taxes, slash spending! But how will I be able to pay my IMF loans? Well, says the criminal in suit and tie, focus on increasing exports. Namely, give your net wealth to other parts of the world in exchange for fucking money with which to extinguish external debts, that were contracted most likely because of fallacious ideological thinking and corrupt purposes (political bribes being given by transcorporate interests).

What we produce domestically, plus what the rest of the world sends us, minus what we send to them equals our net wealth. So if you're a developed country, it's not worth having so much net exports - sending so much net wealth away. When you could render your population to consume that wealth. The real reason why we export, is to be able to import what we can't produce at home.

Of course, the USA in real life has a special status in traderelations. Everyone wants to sell its stuff to them in exchange for paper dollars. The US is NOT indebting itself in foreign currency. China's dollar reserves are staying at a special account within the Federal Reserve. And the chinese can only use it in operations within the private banking system. That money does not leave the country.

For every other country, however, the situation is different. In order to import/buy from country A, you need that country's currency. So what are you gonna do? You go to a bank and give it, say, 100 units of your own country's currency (we'll call them country B money). The bank goes on the fx market, and searches for another party or parties that is/are willing to trade 100 B money for 100 A money.
Once you obtained that foreign currency, you can pay the respective manufacturers in country A with country A money, and now you can import the respective goods.

(S-I)=(savings minus investment)=private sector
(G-T)=(government spending minus taxation)=government sector
(X-M)=(exports minus imports)=foreign sector
All 3 of these sectors cannot be in a situation of surplus at the same time. Someone needs to run the deficit, so the others can be in surplus. And the only one able to do this without going bankrupt is the government.
Naturally, the AR game simulation does not reflect the sectoral balance identity within its simulation. Still, this game is the best you'll find on the internet.


Thanks Helsworth! That is some very good information. I believe I am begining to understand this better now. Big Grin

My pleasure, sir.
You can find free and seminal information about anthropology, history, and money on the net. It's called Chartalism or MMT (modern monetary theory). http://mmtwiki.org/wiki/Main_Page
Here's a small list of heterodox economists (MMTers or post-keynesians); (I'll start with the americans, then the other ones):
Warren Mosler
Stephanie Kelton
Michael Hudson
Randall Ray
J.K. Galbraith
John T. Harvey

Steve Keen
Bill Mitchell
David Graeber
Yannis Varoufakis (to a certain extent; he's still unsure of himself) ^^
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