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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: ild who wrote (30245)	4/8/2005 11:45:34 AM
From: ild	Read Replies (2) of 110194

Date: Fri Apr 08 2005 11:31 trotsky (it is an old adage) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved that the lessons of history remain forever unlearned. latest proof: kitkat's 10:19: "American senators to vote on .... "legislation that would give China six months to revalue its renminbi or face a 27.5 percent tariff on all its imports" " now, i wonder if any of the senatorial geniuses has heard of Frederic Bastiat? no? well then, have any of them heard about the Smoot-Hawley Tariff Act of June 1930? this law was enacted for the exact same purpose - allegedly to 'protect' US industry from 'unfair competition' from abroad. it is probably no exaggeration to say that this law not only worsened the Great Depression considerably by denying the newly impoverished populace and suffering businesses access to cheap goods, but it also hastened the arrival of WW2 since it helped to slow down international trade and co-operation which had just begun to recover from the WW1 debacle. i mention Bastiat because he laid the theoretical framework that shows that tariffs are among the biggest enemies of prosperity ever devised. it is simply wrong to believe that prosperity is evidenced by scarcity - it is , au contraire, evidenced by abundance. tariffs are a means to artificially create scarcity on account of the wrong-headed beliefs that these economically illiterate politicians have just revived. it is of course true that SOME will profit from this scheme - but it is like many such schemes devised by the state one in which the few profit to the detriment of the many. it invites inflation, it diminishes the international division of labor, and ultimately it reduces the consumer's choices and lowers his standard of living. however, it has ALWAYS been good for at least one thing: buying votes. this is because the bulk of the populace is just as ignorant as the politicians when it comes to the economies of trade. admittedly it does require an open mind as well as at least some rudimentary skills in the thinking department to get to the bottom of the matter and recognize how the seen and unseen effects balance out. this is why Bastiat wrote his treatise - he wanted to make things clear. it is of course no wonder that people are getting worried about the persistent and continually expanding trade deficit - it IS worrisome. but the root of the problem is not a lack of tariffs or even the pegging of the Chinese currency. the root of the problem is the fiat money system itself. of course THAT will NEVER be attacked by the good senators - since it allows them to spend a lot of money they don't have, and is thus an even better means of buying votes. Bastiat's treatise: econlib.org and the very funny 'petition of the candlemakers' , which unmasks the illogical nonsense of protectionism with a dose of humor ( the candlemakers want the government to combat the unfair competition from the sun, which has the gall of 'dumping' light on France FOR FREE! ) bastiat.org

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