this post was submitted on 07 May 2025
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That's a misunderstanding of the causes. Now, admittedly there's a debate on this so what I will say is an opinion, but one that shows how the tariffs did cause the great depression.
The problem people have in understanding the great depression is the initial shock isn't the cause so much as the trigger to the cause which is the tariffs.
Had the tariffs not come into play, the stock sell off and subsequent deflation could have been resolved with simple monetary easing, which is what we do today. This would have simply been a recession and we would move on. However, the tariffs following the stock sell off is why it's the great depression and not just a simple recession.
In fairness, monetary easing policy didn't really come into play until after Brenton wood agreement. That said, it would have been the right solution during the onset of the great depression.
So you can't actually say that tariffs didn't cause the great depression as again had it not been for tariffs we would have pulled through.
With that in mind, would monetary easing help us this time after the shock of tarrif-ing the hell out of everything?
No, the tariffs are actively preventing monetary easing. If you were wondering what the news about bond rates and the conflict between Bessent and Powell is about, it's because they can't ease.
At a core easing relies on borrowing money to fix the downturn. Usually, when a downturn happens, interest rates go down because there's less to invest in. If you can't get a 8% return on stocks, you buy bonds until bond returns go below 4% or so. Except, thanks to crazy man tariffs, no one trusts the bonds anymore. So USA can't ease.
I also want to note, this was clearly Bessents original plan. Hurt the economy with tariffs, then do easing and pull more money back into the American Treasury. But oops, no one trusts USA anymore...
*Edit: Lol, god damn this happens fast. Powell is talking about what I'm talking about here literally just now.
https://lemmy.ml/post/29763814?scrollToComments=true
So the inflation he's talking about is why they can't ease. Normally when stocks go down, bonds go up it's caused by deflation. People stop spending money so prices go down and thus, bond rates go down. But we're not seeing deflation, we're seeing inflation, which again is causing the inability to monetarily ease. It's just funny to me we were just talking about this and bam, there's a news article.
Sweet jebus, you're not joking. That really was fast. Thanks for being ahead of the curve for us lonely souls on the Fediverse - even if it was only for a few hours or so. And thanks for answering my question.
This aligns strongly with some sentiment I've seen around here. That what we're really up against is just a cadre of goons that are laser-focused on short term greed, a very simple playbook, and little else. I say "goon" only because I'm at a loss for a word that means: "dangerous like a cornered-and-hungry predator, yet piloted by weaponized levels of stupidity."