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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: Maurice Winn who wrote (116818)	10/14/2003 8:25:06 PM
From: Ilaine	Respond to of 281500

Hi Mq - Great Depressions are Perfect Storms caused by the coincidence of typically three or more lesser depressions or recessions in various sectors of the economy all happening at once. The tariff situation in the 1930's was exacerbated by problems in the gold/dollar-pound-franc-mark ratio, which were leading inexorably to deflation, especially in the price of commodities. For example, countries which had borrowed money from the US in the booming 1920s had to repay or at least service the loans in either dollars or gold. But the only way to get dollars was to sell to the US, and the tariffs made it impossible to sell commodities to the US. So, they had to repay using gold, but that meant that there was no gold in the banks to act as reserves for their own currencies. An economist of the time liked the situation to the US simultaneously having a noose around the throat of the borrower (that's the loans) and a pitchfork at their throats (that's the tariffs). In contrast, in 2003 the US is a net borrower, not a net lender, as it was in the 1920s. Tariffs are bad ideas, but are intended to combat state subsidies, which are bad ideas, as well. Well, I suppose it's fair to say that a tariff is essentially a state subsidy. Unfortunately, the US does subsidize domestic industries, as well, e.g., agriculture. A lot of Americans are very upset about "their jobs" being outsourced or taken by immigrants. I suppose I could complain that a lot of people are using software instead of lawyers these days, but, truth be told, I use the same or similar software and it makes me more productive, so no complaints from me. I benefit from lower interest rates and cheaper prices from companies having lower overhead margins, and my guess is that it's a net plus overall, but no fun for the guy who can't adapt.