Obama's jobs plan: "double our exports over the next five years" wtf?

[Twistedpixel]

HappySqurriel said:

Twistedpixel said:

Invest money from their trade surplus to finance their trade deficits? How does that work? Most countries which currently have trade surpluses have had them for a while and the same applies to countries with trade deficits.

When you have a massive trade surplus it is inevitable that the valuation of the currencies will change and (therefore) reduce the competitive advantage you have (typically through inflation), or you will be forced to build up a massive reserve of foreign currency. If you choose to take this foreign currency and invest it in its country of origin you will (hopefully) build up a very large portfolio of investments and, in a similar fashion to retirement, you can slowly drain this investment portfolio to survive the reversal of the balance of trade without significant inflation or deflation.

Ahh, sorry I see what you mean now. I agree.