Not quite the meltdown we were promised, is it? Oh, I get it – we’re not out of the woods yet. A reshaping of the American and global economic order isn’t going to be easy and there will be rough patches…but after global markets melted down we were promised a new Back Monday this…well, Monday. You know: something like a 25% drop in stock prices. Didn’t happen. A slight drop after all was said and done…and so far today things are positive. Maybe it ends positive or negative…but it isn’t a Crash.
People went into panic mode because they’re stupid and ignorant. A bad combination. The Official Economic Narrative is that tariffs caused or exacerbated the Great Depression. This is dogma – people believe this with the faith of a Christian in the life of the world to come…perhaps even more so. As I’ve said many times over the years, this Narrative is drivel. And we’ll go back to the other Great Depression to illustrate my point.
Other Great Depression? Yes, folks: history didn’t start last week. Been going on for a while now and there really is nothing new under the sun. The Other – or earlier – Great Depression started with The Panic of 1873. Like the Great Depression we’re all familiar with, it was triggered by a financial crash in Austria (then the Austro-Hungarian Empire). But that was just the trigger – a series of bank failures which rippled out through the economic world…not really causing the Depression so much as exposing the underlying economic malaise. The real problem was excess production capacity in the world – and this was created largely by we Americans and the Germans.
For America, in the aftermath of the Civil War we went on a boom of investment in new enterprises, especially railroads. Everyone is familiar with the trans-continental railroad completed in 1869 but that represented only a small amount of the new tracks laid. We had a positive mania for building railroads – and this called forth a lot of attendant economic activity to support this construction. It was all great except for one thing…we were building far more than we needed. The trans-continental was needed but the amount of people and freight to ship across it was limited. The far west still having very low population and there not being a huge Pacific trade like we have today. Meanwhile, over in Germany, the Krauts were slopping over with money they extracted from France after the Franco-Prussian War in 1870 – five billion francs in gold. This infusion of cash plus the euphoria of victory in war cause the Germans to also go on a mania of building capacity they didn’t need at the moment. Oh, sure, like the American railroads what the Germans built (also a lot of railroads) would eventually be extremely useful but it was a very hothouse climate of building capacity that simply wasn’t needed at the moment. And to get all this done the Germans, like the Americans, also created a debt bubble which could only be sustained as long as the building mania lasted. Once the financial crisis was triggered in Austria, the debt bubble came crashing down and started what the people of the time called The Great depression.
And it was a bad one. Around the world all major economic powers felt it and it went on for five or six years. Lots of unemployment, businesses closing, reduced production. Just a miserable lousy time but back in those days Keynes wasn’t born and writing his drivel so everyone just tightened their belts and kept working until the years went on and the economy recovered. And so it did. For the USA, we emerged from it around 1879 and things were swell until the Panic of 1893 tossed us back into a shorter but actually more severe Depression. Lets say, though, that by 1880 the whole world had emerged from the Depression following ’73. With one exception: the richest and most powerful nation in the world: the United Kingdom. It didn’t emerge from Depression until after the Depression caused by the Panic of 1893. In that country the period 1873 to about 1899 is called the Long Depression. It wasn’t as severe as what happened in the USA or Germany, nor as bad as the 1930’s Depression but it was, as you can see, a very long time to be in the economic doldrums. Here’s the curious thing about it – the German and American economies which recovered faster were Protected, while the British economy which was mired longest was Free Trade.
According to our Official Economic Narrative the US and German tariffs should have mired those countries in Depression longer while the Free Trade regime of the UK should have resulted in rapid recovery. Because, you know, a tariff is a tax on consumers and they always cause a Depression. Except, as we can see, history doesn’t show this. It doesn’t even show it for the Great Depression of the 1930’s.
Nothing in economic history was more severe than the Depression of the 1930’s – both for adverse effects and length of time, it was the worst of the worst. This is because there are two things which will cause an economic crash:
- Overcapacity.
- Decline of demand.
It can be one or both in combination. If you have too much capacity you will hit the wall as you won’t have consumers for all your products. If you lose demand then, well, duh; people aren’t buying your products. The Great Depression of the 1930s was the worst ever experience because it was a very savage combination of both things. And as I’ve said, it all stems from World War One. Really can’t emphasize this enough – the War killed at least 10 million fit, young men. The stored wealth of a century was shot out a cannon. Gigantic additional production capacity was created to feed the insatiable maw of the armies. And then just as the War was coming to a close, the Spanish Flu showed up – to this day nobody knows for sure how many people died of it but estimates run from a low of 17 million to a high of 50 million. Given what happened in the 30’s, I lean towards the higher figure. And that flu wasn’t just any, old flu: for some bizarre reason it mostly killed fit, young men and women (most flu kill the very old and very young). You just gotta think of that scythe through the population of the future…the people who would be having children, building homes, buying products…just gone. Wiped out and over a total period of just six years. As many as 60 million…and this out of a global population of 1.5 billion. It would be like 320 million people dying in the next 6 years. Imagine the dislocation of that!
And that, my friends, was why the Great Depression happened. Not tariffs. Not monetary policy (ie, being on the Gold Standard). Not anything but the fact that while the world built massive capacity 1914-1918 it was losing massive demand…while simultaneously blowing through its entire life savings and then piling up huge, unpayable debts. And the reason why the proposed “cure” for the Depression didn’t work was because the Keynesian model said that if consumer demand is down you can stimulate it with government spending. First off, wow what a stupid concept: the government money is extracted from the people with low demand…how does that do other than harm? But supposed by some magical operation it didn’t harm, how could it help? The people were already out there – needing food, clothing, housing, etc. The demand was there. It doesn’t need to be stimulated. In fact, it can’t be stimulated. Our problem was we could make far more than the people needed while having a web of unsustainable debt honeycombing the financial system. Honestly, the way out of the Depression was probably just an annulment of global debts…just pretend nobody owed anyone anything and start from scratch. Would still have caused a Depression but probably only for a year or two. But here’s the thing, no matter what you did, the only way to get more demand – to get back to that happy time of 1913 – was for the demand lost in War/Disease to be replaced…and that takes new people.
And eventually the world got it – in the post-WWII Baby Boom and a generally more survivable environment for humanity. And it was everywhere all at once. Sure, the Third World had the least immediate improvement but improvements in survival were global – and from infant to adult (lost in the press of events post-WWII is the fact that the introduction of modern, Western hygiene practices during the American occupation of Japan saved more lives 1945-1950 than were taken during the war). This huge increase in population – 2 billion to 8 billion in just a century – is what has made the wealth of today possible. There are 4 people in the world today for every person there was a century ago…all needing food, housing, clothing, etc. A tariff will not close down this demand. The market will remain. And remain insatiable. Trump’s tariffs wouldn’t kill this goose laying the golden eggs…the only thing that can kill it is massive overcapacity or massive population drop (which is coming starting in 2100 but we won’t concern ourselves with that today). All Trump is trying to do is to move some of the capacity back to the USA so that American workers can fill some of this insatiable global demand…like we used to until some moron decided that Free Trade was the way to go. Side note: he’s not really going for zero-zero on tariffs…that’s an element which will be prudentially applied case-by-case but the goal is to get production back home. Bottom line: the tariffs aren’t going away.
Real world, guys. Real world. It is time for us to get back into it. We’ve been living in a fantasy world constructed by morons who are mostly trying to justify continued Moron Rule. The people who have run our system – and run it into the ground – really have no clue what they’re doing. They’re just in charge of it and rich off it and so don’t want it to change. They don’t care that the nation is dying and the world is on fire (the Ruling Class left off any concept of God or morality decades ago)…they got theirs and they want to keep it. Trump isn’t actually threatening their wealth…he’s threatening their position and that is why they are so firmly opposed…but being stupid they can only oppose him via stupid means (but, be careful; stupid people can pull a trigger, as we saw twice last year).
As I said, there will be shocks and even outright failures as we MAGA. Going to happen. Won’t be easy. But we’re on the path to success. Just stick it out.
Blogs For Victory 
The tariffs are almost more about national security than they are about fair trade. Ultimately, tariffs bring back manufacturing (to avoid the tariffs) which is vital in an increasingly dangerous world. We must manufacture our own antibiotics, other pharmaceuticals, steel, oil, chips, etc … and become self sufficient in all industries that are foundational to a society, Additionally, manufacturing wages build the middle class and communities and help make families self sufficient. And this is all worth fight for … keep up the good fight
It’s like the lessons of the Covid Panic just melted away and no one remembers the vulnerability of having to depend on an unfriendly nation for basic supplies of drugs and medical supplies in an emergency—which BTW that same unfriendly nation has the ability to create. And might have created.
The markets ended down a bit today and I looked at what led the way down – Apple, Amazon, WalMart…you know, the companies most dependent upon Chinese suppliers.
Pro tip: if your stuff isn’t made in China, you don’t have to worry about what happens in China.
The whole thing is just ridiculous – what made American corporate executives think it was a good idea to send their production capacity – their ability to make money – over to a mercurial and corrupt tyrannical country? I mean, I realize that almost everyone who could did it but, seriously, how was this a good idea? You live in a Rule of Law nation where you can count on some basic honesty in financial transactions, with an infrastructure working 24/7 all around the country (dirty secret: only in the showcase cities does China work all the time)…and you’re going to give that up?
And give it up for what? Not because they wouldn’t make money producing in the USA, but that they could make even more money producing overseas. We really need to consider this double-screwing here…its not like they pay premium wages overseas (and I bet most of their workers overseas are contract employees provided by a third party, who takes a cut) and they don’t reduce the retail price here. Just screwing everyone…and paying themselves tens of millions per year. I mean, sweet gig if you can get it…but an entirely un-Christian way to do business. And, as it turns out, stupid: any dispute between the USA and China and you lose everything (which, of course, is why they fight so hard to keep our attention away from China…part of the reason we’re toe to toe with Russia over Ukraine is that it suits our business leaders to have us hate Russia and pay no attention to China).
Q: what made American corporate executives think it was a good idea to send their production capacity – their ability to make money – over to a mercurial and corrupt tyrannical country?
A: Slave labor = bigger profit margins
part of the reason we’re toe to toe with Russia over Ukraine is that it suits our business leaders to have us hate Russia and pay no attention to China).
Game. Set. Match
Kurt Schlichter has, for a long time, held the title of Best Phrasemaker On The Internet, but Jeff Childers (evidently known in the trolliverse as Big Poopy-Head Liar-Face) may have knocked him down to second place with today’s offering. Example: “Even accounting for widespread Trump Derangement Syndrome, it’s astonishing how the economic experts and even corporate media are so utterly blind as to what is really happening here. They’re like Mr. Magoo wearing a falconry hood” with its own illustration
Childers asked ChatGPT to summarize Trump’s 1987 dealmaking philosophy from his book The Art Of The Deal and it provided this:
Childers then links Trumps’ recent actions to the rules he cited in his book, such as “Yesterday, President Trump signed another massive executive order engineered to unleash more domestic energy production, which will lower costs, boost employment, and strengthen the dollar. It’s number 6: protect the downside, and the upside will take care of itself. In a presser with coal miners, President Trump called the negotiations, not off-the-rack, but highly-tailored deals.“ (Here we pause for the spurts of outrage because Childers cited the wrong rule, writing “6” instead of “2”. HE IS SUCH A LIAR! Now that this is out of the way, we can continue….)
As Trump is leveraging talks initiated by tariff discussions to address other issues as well, referring to this as one-stop shopping, Childers makes two points. One is that this represents a historic reset of global economics and the other is that the Left hates it because it undermines the Left’s power base.
The lead-in to the article on Trump is also fun to read, though (and perhaps because) it is not only funny it is purposely non-PC.
After today’s surprise announcement what I see Trump doing is decoupling us from China and working deals with everyone else…with, of course, 10% now being the baseline of tariffs on imports (this to make it harder to cheat your way into USA market share).
It can’t be emphasized enough how malevolent the PRC is on the world stage – the leaders there are corrupt and cruel. They have absolutely no legitimacy as the PRC has never had any semblance of consent of the governed. The less we’re dealing with China, the better.