Actually, I just came home from tuition. Well, just want to share something my tutor said.
**Warning- If you easily bored by political discussions and economic terms then please do not read on any further**
For the past 20 years or so, Japan had been exporting extensively to the United States. (You all know that right?) However, all that they got in return is money. Don't look at me like that, let me explain. What's the real use of having liquidity if America is not really able to back up the massive amount of bonds that is kept by the Japanese treasury. What I mean is that, yes, Japan is getting richer but only in the sense that they have more liquidity but not in the amount of goods that they have. What is the use of money if you are not going to be able to exchange it back into goods? In other words, America seems to be consuming for free. Yes I know that they do pay money for the goods but are they really able to exchange their goods for that money when the time comes? So it seems that Japan is really forgoing having more material goods in exchange for a better GDP growth report.
Coming to think of it, GDP and GNP are really just games that we are all embroiled in. So what if we are rich if we are not able to get the goods that we want in exchange for that money.
You don't have to agree with me. In fact, if you have some comments, flames, death threats, etc, I am always ready to accept them. The best would be if you had some more things to add to the argument, that way, I would have more content at my disposal for the A-level economics paper in 2 months time. So in short, what I mean is PLEASE TELL ME IF THIS POINT OF VIEW IS RIGHT OR WRONG!
Another outburst, another apology.
Thanks for reading!
PS: This argument is actually my tutor's. But it made sense at that time. I'm not even sure if I interpretated his argument correctly.
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