Posted on 07/20/2015 4:46:29 AM PDT by SeekAndFind
If you doubt Laffer, consider his most brilliant move....
Art moved from California to Tennessee, from crushing taxes to freedom
“High tariffs on imports will result in high tariffs on our exports.”
That is an OK statement to make when you export more than you import. We import $500 billion more than we export. Import $2.75T, export $2.25T. Most of what we export few nations can do without: Commercial aircraft, semiconductors, and medical equipment.
save for later
Bernanke’s doctoral dissertation identified what Fischer already had: that the Depression was the result of the Reserve Board restricting the money supply at exactly the moment when it needed to expand it radically.
His solution was what earned him the name “Helicopter Ben”.
And that’s what has been done since late 2008. Massive money printing with ever lower interest rates, which Bernanke engineered by going where no one had gone before: the Fed buying it’s own debt.
It worked to a point. Here on the West Coast we are back in the bubble. How long will it last? Hard to say. Reinflation is like that...but the debt is still there.
But one thing we do know is that trade tariffs were a footnote to the actions of the Reserve bank. Regardless of how you feel about a currency based on debt issuance, what was done by Bernanke was the correct thing to do in such a system. And had they done it in 1932, the Depression would not have gotten as bad as it was.
From Romer and Hsieh:
“In their classic study, Milton Friedman and Anna Schwartz argue that the Federal Reserve allowed the money supply to plummet because of ineptitude and poor leadership”
That was the case. We are in a monetary system governed by complex non-linear dynamics and slow witted dopes who worked as bank managers had no clue about the nature of those dynamics.
And Smoot-Hawley was just an excuse for them concocted by the Northeastern money establishment to cover for their mistakes.
Laffer is almost being disingenuous in this article, or maybe he is. Compare the graph line in Comment #1 showing the drop in Total trade of goods (broken line) with the drop in Total GDP in this graph:
http://www.usstuckonstupid.com/sos_charts.php
GDP, of which trade was a small part, had the same steep drop. What do we think followed what? Did the small trade element pull down the entire GDP, or did the non-trade 90%+ of the economy pull down the small trade portion as the money supply decreased due to Fed policy?
...send you the bill for social spending...
That's usually how the left goes on this, that we need higher taxes in order to support ever expanding welfare rolls --no matter what. This has gone on so long that we not only now have a debt burden approaching Greek levels (as tax rate hike quash revenue) but welfare programs end up making less sense than ever: America's Poor Still Live Better Than Most Of The Rest Of Humanity.
I think Laffer is wrong about this.
“U.S. imports decreased 66% from $4.4 billion (1929) to $1.5 billion (1933), and exports decreased 61% from $5.4 billion to $2.1 billion. Thus, net exports declined from $1 billion to $600 million, while GDP was $58.9 billion.”
In other words, this was just a drop in the bucket compared to domestic production and consumption.
However, what it *did* do was help to disconnect the US from the international depression. While we also had our own depression, our “boat” was far less tied to their sinking flotilla.
Probably the only bad part to the tariff was that Canada was included in it. Our largest trading partner should have been imagined as part of our economic bloc, and thus spared the disconnect.
The big liberal lie “Smoot-Hawley called the Great Depression”.
When did he say that?
bkmk
Complete and utter lie.
I’m not sure why you bother any more. These people are complete idiots, seriously.
In their fantasy-land “free trade” results in some sort of utopia instead of the obvious (to anyone with a decent IQ) leveling out of first-world economies to the lowest possible level.
We get to live through this inevitable decline...how fun for us! Paying the freight for more & more people who don’t have jobs; worthless immigrant criminals; and ever-declining quality of products, services & healthcare.
But, don’t you worry...robots will save the day! OMG.
This comment is obviously not “directed” at you as I know you are one of my compatriots...hopefully a few of us will still be around after the implosion to bring some order to what is left of the idiotic masses.
I’m not sure why you bother any more. These people are complete idiots, seriously.
In their fantasy-land “free trade” results in some sort of utopia instead of the obvious (to anyone with a decent IQ) leveling out of first-world economies to the lowest possible level.
We get to live through this inevitable decline...how fun for us! Paying the freight for more & more people who don’t have jobs; worthless immigrant criminals; and ever-declining quality of products, services & healthcare.
But, don’t you worry...robots will save the day! OMG.
This comment is obviously not “directed” at you as I know you are one of my compatriots...hopefully a few of us will still be around after the implosion to bring some order to what is left of the idiotic masses.
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responding to this old thread on tariffs but your comment is very true especially for the announcement POTUS made earlier this week.
Some people keep on clinging to that free trade fantasy.
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