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Did Tariff's Cause the Great Depression?
#1
Really amazing article here: https://www.armstrongeconomics.com/world...epression/ 

Includes actual headlines from various newspapers during the time as well as a bond chart highlighting the destruction of U.S citizen's savings in sovereign debt.
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#2
History doesn't repeat, but it rhymes.
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#3
Did Tariffs Cause the Great Depression?

No. It was caused by the collapse of a giant financial bubble. Inflated largely by easy money courtesy of the Fed. Even Alan Greenspan alluded to this in his famous essay 1966 Gold and Economic Freedom:

Quote:When business in the United States underwent a mild contraction in 1927, the Federal Reserve created more paper reserves in the hope of forestalling any possible bank reserve shortage. More disastrous, however, was the Federal Reserve's attempt to assist Great Britain who had been losing gold to us because the Bank of England refused to allow interest rates to rise when market forces dictated (it was politically unpalatable). The reasoning of the authorities involved was as follows: if the Federal Reserve pumped excessive paper reserves into American banks, interest rates in the United States would fall to a level comparable with those in Great Britain; this would act to stop Britain's gold loss and avoid the political embarrassment of having to raise interest rates. The "Fed" succeeded; it stopped the gold loss, but it nearly destroyed the economies of the world, in the process. The excess credit which the Fed pumped into the economy spilled over into the stock market, triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in braking the boom. But it was too late: by 1929 the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed. Great Britain fared even worse, and rather than absorb the full consequences of her previous folly, she abandoned the gold standard completely in 1931, tearing asunder what remained of the fabric of confidence and inducing a world-wide series of bank failures. The world economies plunged into the Great Depression of the 1930's.

Blaming it on tariffs got popular when the free trade lobby saw its potential as a scare tactic against tariffs. Of course all taxes are economically burdensome, but it's never explained why tariffs are more so than others.
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#4
(07-10-2018, 02:04 PM)Finster Wrote: Did Tariffs Cause the Great Depression?

No.  It was caused by the collapse of a giant financial bubble.  Inflated largely by easy money courtesy of the Fed.  Even Alan Greenspan alluded to this in his famous essay 1966 Gold and Economic Freedom:  

Quote:When business in the United States underwent a mild contraction in 1927, the Federal Reserve created more paper reserves in the hope of forestalling any possible bank reserve shortage. More disastrous, however, was the Federal Reserve's attempt to assist Great Britain who had been losing gold to us because the Bank of England refused to allow interest rates to rise when market forces dictated (it was politically unpalatable). The reasoning of the authorities involved was as follows: if the Federal Reserve pumped excessive paper reserves into American banks, interest rates in the United States would fall to a level comparable with those in Great Britain; this would act to stop Britain's gold loss and avoid the political embarrassment of having to raise interest rates. The "Fed" succeeded; it stopped the gold loss, but it nearly destroyed the economies of the world, in the process. The excess credit which the Fed pumped into the economy spilled over into the stock market, triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in braking the boom. But it was too late: by 1929 the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed. Great Britain fared even worse, and rather than absorb the full consequences of her previous folly, she abandoned the gold standard completely in 1931, tearing asunder what remained of the fabric of confidence and inducing a world-wide series of bank failures. The world economies plunged into the Great Depression of the 1930's.

Blaming it on tariffs got popular when the free trade lobby saw its potential as a scare tactic against tariffs.  Of course all taxes are economically burdensome, but it's never explained why tariffs are more so than others.

If market forces dictated a rise in interest rates how did the bank of England stop that rise in interest rates?
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#5
(07-10-2018, 04:04 PM)cbeatty Wrote:
(07-10-2018, 02:04 PM)Finster Wrote: Did Tariffs Cause the Great Depression?

No.  It was caused by the collapse of a giant financial bubble.  Inflated largely by easy money courtesy of the Fed.  Even Alan Greenspan alluded to this in his famous essay 1966 Gold and Economic Freedom:  

Quote:When business in the United States underwent a mild contraction in 1927, the Federal Reserve created more paper reserves in the hope of forestalling any possible bank reserve shortage. More disastrous, however, was the Federal Reserve's attempt to assist Great Britain who had been losing gold to us because the Bank of England refused to allow interest rates to rise when market forces dictated (it was politically unpalatable). The reasoning of the authorities involved was as follows: if the Federal Reserve pumped excessive paper reserves into American banks, interest rates in the United States would fall to a level comparable with those in Great Britain; this would act to stop Britain's gold loss and avoid the political embarrassment of having to raise interest rates. The "Fed" succeeded; it stopped the gold loss, but it nearly destroyed the economies of the world, in the process. The excess credit which the Fed pumped into the economy spilled over into the stock market, triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in braking the boom. But it was too late: by 1929 the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed. Great Britain fared even worse, and rather than absorb the full consequences of her previous folly, she abandoned the gold standard completely in 1931, tearing asunder what remained of the fabric of confidence and inducing a world-wide series of bank failures. The world economies plunged into the Great Depression of the 1930's.

Blaming it on tariffs got popular when the free trade lobby saw its potential as a scare tactic against tariffs.  Of course all taxes are economically burdensome, but it's never explained why tariffs are more so than others.

If market forces dictated a rise in interest rates how did the bank of England stop that rise in interest rates?

Oddly, I find myself in agreement with Finster.

The Governor of the Bank of England directly asked the head of the New York Federal Reserve Bank to cut rates after 1926 as an accommodation to the Bank of England.  While his name escapes me right this second, that gentleman complied.  Benjamin Strong?  The NY FRB guy died in 1928, he might have known what to do as the U.S. Stock Market boom got out of hand.  He also might have had the balls to stand up to Andrew W. Mellon, who intentionally made the Great Depression worse after the fall of 1929.
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#6
Did anyone read the article? It stated that they weren't the cause.
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#7
Yes, I read it. It's just interesting that tariffs are a big topic at this moment when economically things are very tenuous at best.
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#8
(07-10-2018, 07:58 PM)StingingNettle Wrote: Did anyone read the article?  It stated that they weren't the cause.

I have never the believed the argument that tariffs were the cause. But then I don't believe globalist propaganda, as do some on this board.
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#9
In early September 1929 there was probably some bigly bullish guru that was calling for DOW 1,000!!!! DOW 1,000!!!!

The Smart Money promptly sold.





da bear
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#10
Clearly the cause was multi-factorial as are most real problems in life.

I think a key issue was the gold standard. With the population and economy growing but the currency fixed to the amount of gold, none of the major powers could inflate their economies out of the depression. The Germans did, but went too far.
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