For years, I have been saying that the U.S. Budget cannot be balanced over an extended period of time in the absence of a trade surplus. Now I am making the following challenge to all economists and proponents of a balanced budget: $200,000 to the first person who explains why the article "Analyzing the Economy with Poker" is incorrect in a broad sense. This article, which is available without charge by calling 800-666-3903 or writing to Box 7634, Beverly Hills, CA 90212, explains that a) there are essentially three types of wealth: real assets, stocks, and net non-stock financial assets. Focusing on net non-stock financial assets, b) above-average income Americans must increase net non-stock financial assets each year in order to have a substantial incentive to produce and innovate, c) this "win" must come at the expense of either the U.S. Government, the below-average income class, or foreigners, d) since we are running a current account deficit (losing to foreigners) the only entity that can "keep losing" to fund the gains of the above-average income class is the Government. In other words, balance the budget for a prolonged period in the absence of a current account surplus and Americans will not increase net non-stock financial assets after taxes and will have little incentive to produce and innovate. With little incentive to produce and innovate, production of real assets would also decline, as would in all probability, stock prices. So the best way to attack budget deficit growth is to try to improve the trade deficit. It is no accident that most world governments have been running deficits for many years. If world governments as a group ran a balanced budget, the world-private sector could not increase net-non-stock financial assets and would have much less incentive to produce and innovate.
$ 200,000 PRIZE
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