US economic power

[Schmedlap]

A goods trade balance deficit equals a capital transfer deficit and lower prices broaden the base of customers.

The first part of that is correct. The second half is false. Demand is not created by an abudance of supply.

Finally, production can be changed to different goods to meet demand elsewhere.

A severe economic downturn in the US in all likelihood translates into a dramatic global economic downturn, as well, impacting the disposable income of the people who live elsewhere.

If the Americans suddenly stopped buying, they would also stop lending. The money would stay outside, the goods would stay outside - and people would simply buy more stuff with their own money after a short (2 years at most) phase of adaption.

I presume that by "they would also step lending" that you mean foreign gov'ts would stop lending us money. The issue is not whether they would buy more of our paper, but rather they would be stuck with buckets of paper that we will still owe money on. Even if we never issued another T-bill, we still owe billions in interest every year on paper that we have already sold.

Thanks for the elaboration regarding Europe, but keep in mind that that we already agreed on that in the first place, so you are preaching to the choir.