Daily Archives: June 17, 2019

A Mere Eighty Nine Years Ago Today …

The Tariff Act of 1930, known as the Smoot-Hawley or Hawley-Smoot Tariff, was signed into law and implemented protectionist trade policies that raised tariffs on over 20,000 imported goods to the highest levels since 1828 (when the US relied very heavily on tariffs for public funding purposes).

Why is this act so significant? Most economists agree that this act and the following retaliatory tariffs by America’s trading partners were MAJOR factors that resulted in the reduction of American exports and imports by more than half during the GREAT DEPRESSION.

And let us point out that it wasn’t called the GREAT DEPRESSION as a marketing gimmick. It was called the GREAT DEPRESSION because it was one of the greatest declines of the global economy in all of recorded history! In a mere three years, the worldwide GDP fell by an estimated 15%. That’s FIFTEEN times the decline of GDP during the Great Recession of 2008-2009.

In most countries, this depression lasted until the late 1930’s — a whole decade — and in some countries it lasted all the way until the beginning of World War II! In other words, it was 15 times as bad as the Great Recession (which is a marketing gimmick as this was just a blip when all was said and done) and lasted 15 times as long!

And while it officially stated on Black Tuesday (on October 29, 2009), the Tariff Act of 1930 only served to exacerbate a bad situation, and turned what might have only been a truly great recession into a great depression.

So, my American Readers, tell me what you think is going to happen if you decide to keep your current trade-war happy President in charge for another term (assuming the world survives his first term)? [The worst thing is that his father had to live through the Great Depression and should have not only understood how bad protectionism can backfire but passed that message on as a successful businessman.)