@akkartik @haitchfive @coaxial you enforce balance on the financial side, not the goods side. you make it expensive for people to hold your country’s paper (treasuries, private debt, stock, whatever). so exporters, who initially earn paper, are incentivized to redeem them back for goods and services. 1/

@akkartik @haitchfive @coaxial you don’t discriminate between countries or goods (while enforcing balance, there may be other industrial-policy / resilience / national-security overlays to consider). unbalanced trade is paid for with promises. let markets decide what it’s important to buy and sell. 2/

@akkartik @haitchfive @coaxial but if foreigners (in aggregate, swapping amongst themselves) won’t hold your paper in great quantities or for very long, then what you can buy will be tethered closely to what you sell. 3/

@akkartik @haitchfive @coaxial (a party that sells to you, holds paper briefly, then directly or swapping to some other party buys stuff back from you with your own paper should be experience very little penalty. a party that holds your paper should bear a penalty proportional to time. that’s what a “foreign payouts tax” delivers. transactional lending to lubricate commerce is fine. portfolio accumulation, long-term holdings, are penalized.) /fin