Posted on 03/20/2008 2:56:09 AM PDT by Fennie
The Bush administration forecasts a $410 billion federal budget deficit for this year, an indication that, as the US saving rate is approximately zero, the US is not only dependent on foreigners to finance its wars but also dependent on foreigners to finance part of the US government's domestic expenditures. Foreign borrowing is paying US government salaries--perhaps that of the president himself--or funding the expenditures of the various cabinet departments. Financially, the US is not an independent country.
A troubled currency and financial system and large budget and trade deficits do not present an attractive face to creditors. Yet Washington in its hubris seems to believe that the US can forever rely on the Chinese, Japanese and Saudis to finance America's life beyond its means. Imagine the shock when the day arrives that a US Treasury auction of new debt instruments is not fully subsribed...
“I got my degree in the 80s, and we spent plenty of time on it. High school too.”
I’m thankful I studied economics under teachers who understood the Great Depression better than your teachers apparently did. Mine emphasized the stock market failure, followed by bank failures spreading across the nation which made it difficult for businesses or individuals to obtain money to participate in economic activity.
I sympathize that you learned that a little tariff act when trade was a small percentage of the economy was more important than a widespread failure of our finance system.
Did you actually pay tuition to be taught that?
By omitting Smoot-Hawley, your teachers were better than my professors?
I sympathize that you learned that a little tariff act when trade was a small percentage of the economy was more important than a widespread failure of our finance system.
Now you're just putting words in my mouth. I said no such thing.
No. I was still waiting for you to answer my question from post #223.
Show me how you calculate GDP.
Are you aware that ALL economic activity took a nose dive during the Great Depression, not just foreign trade?
Yes, I was aware of that. That's why it was called a depression.
Whatever happened in trade activity was just a reflection of the general economic depression caused by the new Fed’s decreasing the money supply by around 30%.
I don't think the Fed decreased the money supply. Do you? And the Fed wasn't exactly new at that point, was it?
And, you’ll like this, it was Milton Friedman’s work on monetary theory that helped explain the Fed’s role in causing it.
I don't think they caused it, do you?
Read the article and expand your horizons beyond Smoot-Hawley.
You think Smoot-Hawley helped pull us out of the Depression?
Not me. I'm waiting for a Paleo to claim it made things better. Bueller? Bueller?
By my understanding, Smoot-Hawley was one of a list of ingredients in that bitter soup called the Great Depression.
It can neither be completely blamed nor acquitted.
Paul Craig Roberts is still a nutbar moonbat head case.
I don’t calculate GDP. If I wanted to, there are many places on the net that give the general formula. But imports reduce GDP.
“I don’t think the Fed decreased the money supply. Do you? And the Fed wasn’t exactly new at that point, was it?”
Yes, a series of Fed actions decreased the money supply around 30%. Mainly, they made money more expensive and failed to lend to help failing banks, the opposite of what they would today, and are doing on a large scale for financial institutions hit by the sub-prime problem. And the Fed was only about 16 or so years old. Very new and dealing with its first major crisis.
Read the article. It touches on many interesting questions from that era.
“I don’t think they caused it, do you?”
The Fed didn’t set the GD in motion, but yes they caused it to be a long term affair by doing the opposite of what they should have done, and are doing today.
“You think Smoot-Hawley helped pull us out of the Depression?”
No. I think it was irrelevant because trade was only about 10% of the economy, and according to the graph, trade dropped gradually during the first few years of the GD. WWII pulled us out of the GD. Look at the graph, it does show the upturn beginning in the late 1930s, then a very sharp upturn around 1940. The GD was a financial crisis. Smoot-Hawley is just pulled out and dusted off to sell trade agreements these days.
What is that, second week Macroeconomics 101?
Oh my my.
If you post the formula, I can show you you're wrong.
Yes, a series of Fed actions decreased the money supply around 30%.
Which actions?
Mainly, they made money more expensive and failed to lend to help failing banks
So they failed to pump the money supply back up, they didn't cause it to fall. Glad you figured that out.
No. I think it was irrelevant because trade was only about 10% of the economy
So damaging 10% of the economy back then was no big deal but damaging 20% or more of our economy today is a good idea?
Maybe the third week.
You’re back to your usual inane and irrelevant, nonsensical remarks. Whenever you can’t present a cogent argument you always resort to silly word games
“So they failed to pump the money supply back up, they didn’t cause it to fall. Glad you figured that out.”
That’s typical of why it usually becomes a waste of time to communicate with you. I had that figured out for years, and have been saying so since this discussion started. It’s you who fails, over and over, to get the point.
Until next time. And here’s more reading for those who might be interested:
“Friedman and Schwartz argued that all this was due to the Fed’s failure to carry out its assigned role as the lender of last resort. Rather than providing liquidity through loans, the Fed just watched as banks dropped like flies, seemingly oblivious to the effect this would have on the money supply. The Fed could have offset the decrease created by bank failures by engaging in bond purchases, but it did not. As Milton and Rose Friedman wrote in Free to Choose:”
Any effort to rid the world of the knee-jerk Smoot-Hawley references is worthwhile:
http://www.fee.org/publications/the-freeman/article.asp?aid=8132
About halfway down the article.
But I’ll say again, Smoot-Hawley proved nothing about anything. It was just one more reflection of the economic depression caused by the failure of the financial system and the resulting liquidity crisis. The prostitution business also suffered. Maybe that was a major contributor to the Great Depression.
Later, again.
Addendum:
I heard a guy recently admit that he didn’t know much about economics, and that he had a lot to learn. How admirable, but he did know enough to talk about Smoot-Hawley and tell us how it proved that protectionism was always a bad thing, and we better approve any and all trade agreements currently proposed or proposed in the future.
I think he said his name was John McCain, another Smoot-Hawley guy.
Then why did you say they caused it?
But I’ll say again, Smoot-Hawley proved nothing about anything.
It may have helped? It may have hurt?
Later, again.
Let me know when you want to make any more claims about GDP.
“{But man, do the crazies go nuts. I’ve never figured out what the protest is all about, no one ever argues Smoot-Hawley was a net plus. It’s almost as if, if you scream Smoot-Hawley loud enough, you don’t need to argue any further.”
Either that, or someone posts a graph which uses Smoot-Hawley as it’s starting point, and attempts to show all sorts of relationships between tariffs, trade and GDP, relationships that were never established at all other than sticking them on the same graph.
Graph at #167
No one even challenges you for the title; The Inane One.
Many are rethinking their stand on cheap goods.
Besides, Walmart made it’s name with the Made in America label....not made in China.
Post another chart ya found off the net why don’tcha.
While your at it, why don't you tell everybody how much of an expert ya are.
Geez.
Fantastic. Who needs charts? We suck, and it’s because you feel that way.
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