Loading ...Peak Credit vs Tariff war
History of trade protection and credit cycle:From Goldmoney post
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Peak credit is coinciding with trade protection
In a previous article I pointed out the catastrophic danger of combining trade protectionism with the top of the credit cycle. This combination was devastating when the Smoot-Hawley Tariff Act was passed by Congress in October 1929, particularly when compared with the relatively minor consequences of the Fordney-McCumber tariffs of 1922. The difference was Fordney-McCumber was introduced early in the credit cycle, and Smoot-Hawley at its peak. This dissimilarity was the principal driver behind the viciousness of the Wall Street crash and the subsequent global depression.
We have a situation today so similar to Smoot-Hawley and its coincidence with the top of the credit cycle in 1929 that we should be deeply concerned. What is particularly alarming is that international trade appears to have already stopped expanding, almost as if it has run into a brick wall. A comparison with the 1929 experience suggests this result as extremely likely. That precedent warns us today’s international trade may be rapidly sliding from expansion into severe contraction, with dire consequences for the whole global economy. Smoot-Hawley and the top of the credit cycle in 1929 combined into the motive force that made the great depression unnecessarily deep, global and intractable.
That’s a very interesting point.
I dunno. Most countries were self sufficient at the time of the 1920s.
Now, everybody is addicted to foreign stuff and a few tariffs are not going to stop them buying all kinds of things from Asia because we can’t and won’t ever make it ourselves again.
It’ll probably just make everything more expensive and stoke the debt bubble just a little more.
I think after 2008 crisis we have gone into the era of false accounting, like going from the Gold Standard to fiat un-backed money – but this is the next stage, the QE to infinity stage. Everything that does not perform will be monetized by central banks (except gold and silver of course) so ultimately they will own everything.
I mean didn’t global trade already collapse in 2008?
Take a look at Baltic Dry Index BDI – “Beady Eye”
https://stockcharts.com/h-sc/ui?s=$BDI&p=M&yr=17&mn=0&dy=0&id=p84715185119&a=422997387&listNum=1
Yeah, it looks a little like douchebank but almost all of its collapse was in 2008.