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Beginning of another Great Depression?

ramneeksingh1992
Posts: 1
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11/28/2016 3:37:01 AM
Posted: 1 week ago
Promises made by President Trump during the campaign seem similar to what President Hoover made during his campaign. In 1928, Herbert Hoover promised to raise tariffs and, with a Republican majority in the senate and in the house, he did so by introducing the Smoot-Hawley Tariff which, according to former Fed chief - Ben Bernanke, contributed to the depth and length of great depression. With protectionists, like Marine Le Pen, Nigel Farage etc, gaining ground, the world ominously seems to be moving in the same direction as it did in the late 1920s.
David_Debates
Posts: 244
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11/28/2016 7:47:27 AM
Posted: 1 week ago
At 11/28/2016 3:37:01 AM, ramneeksingh1992 wrote:
Promises made by President Trump during the campaign seem similar to what President Hoover made during his campaign. In 1928, Herbert Hoover promised to raise tariffs and, with a Republican majority in the senate and in the house, he did so by introducing the Smoot-Hawley Tariff which, according to former Fed chief - Ben Bernanke, contributed to the depth and length of great depression. With protectionists, like Marine Le Pen, Nigel Farage etc, gaining ground, the world ominously seems to be moving in the same direction as it did in the late 1920s.

But Hoover isn't what caused the depression. It was fast and easy money. That's not what Hoover promised, and it's not what Trump is promising either. Hoover was simply President when the bubble burst, he wasn't the cause of it.
Stymie13
Posts: 2,162
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11/28/2016 7:56:05 AM
Posted: 1 week ago
And bernanke, who held interest rates at an artificially low rate for far too long, is probably the last person to listen too.
BillSPrestonEsq
Posts: 134
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12/5/2016 4:05:09 AM
Posted: 16 hours ago
At 11/28/2016 3:37:01 AM, ramneeksingh1992 wrote:
Promises made by President Trump during the campaign seem similar to what President Hoover made during his campaign. In 1928, Herbert Hoover promised to raise tariffs and, with a Republican majority in the senate and in the house, he did so by introducing the Smoot-Hawley Tariff which, according to former Fed chief - Ben Bernanke, contributed to the depth and length of great depression. With protectionists, like Marine Le Pen, Nigel Farage etc, gaining ground, the world ominously seems to be moving in the same direction as it did in the late 1920s.

I don't attribute much of the great depression to tariffs. I share the monetarist theory that it was the expansion and contraction of the money supply. Though most schools should agree that tariffs only create waste, I think that is most widely accepted view. So, you could definitely argue that tariffs contributed at least to the severity of the depression even if minimal.
I think what happens will be largely up to the FED and partly whatever crazy stuff the government decides to do. If interest rates are raised high enough the inevitable recession will ensue. Looking at the data it's hard not to see that the business cycle's booms and busts linked directly to the fed funds rate. It's probably close to impossible to predict exactly when the tipping point is though.
Ultimately I wouldn't fret about tariffs creating a great depression on their own. At least not the kind of tariffs that would feasibly be implemented.