Oldsouljer said:
Civilized said:
Oldsouljer said:
Werewolf said:
killing you, LOL. You and #Sieve will celebrate in the streets when the 1st hint of inflation occurs. Could be a bump but it's targeted and somewhat supply chain and enemy/adcersary driven.
#Gobbler could care less about supply chain and national security....it's all secondary to that 5 cents on the dollar.
I listened to Kudlow on Fox Biz on the way home tonight. He was carrying on about the tariffs and how no inflation surge had proved the skeptics wrong. I noticed no one mentioned to him that the big post-COVID dollar dump didn't immediately ignite inflation for at least a year after the $7 trillion stimulus. That said, I doubt the tariffs are inflationary but I do believe Powell isn't above stealth QEing and blaming the result on tariffs.
Why do you doubt the tariffs are inflationary?
1. Because up until now, they've always been blamed in part, via the Smoot-Hawley Act for the Great Depression, a highly deflationary event, and
2. According to Milton Friedman, "inflation is 'always and everywhere a monetary phenomenon' a problem of printing too much money.", and
3. Until that time of nearly a century ago, tariffs haven't been used in such a sweeping manner such that I believe it remains to be seen if they're inflationary or not.
1. That's kind of like saying "I couldn't feel the medicine's side effects because I died." The Great Depression had five or six core drivers that rocked spending, output, global trade, banking, etc. that each by themselves could have badly harmed the economy and all thrown together it was the atom bomb of economic outcomes.
Smoot-Hawley is widely considered to have worsened the effects by further contracting/cooling global trade. Absent a massive stock market crash, collapsed banking industry, and failed credit markets, the much more likely outcome today is simply higher prices. Yeah, if our tariffs (and the rest of the world's retaliatory tariffs) cause a big global recession, we may not see much inflation, but I don't think that's some desirable outcome or a ringing endorsement of tariffs achieving their goal.
2. Also Milton Friedman:
Quote:
"The benefits of a tariff are visible. Union workers can see they are 'protected.' The costs are spread over millions of consumerswho are unaware of how much they are paying."
Friedman clearly believed that tariffs act as a tax on consumers, raising prices on imported goods and reducing consumer choice. He often emphasized that the cost of protectionism is paid by the public, not foreign producers.
3. Sure, every situation is different but there's also no reason to think the fundamentals of these tariffs are different than all the other times countries levied them, considering the effects of those tariffs were basically uniformly to raise prices. That's just saying, "yeah, 10 times out of 10, x followed y, but this time it may be different." Yeah there's a chance but if you're in the business of probabilistically forecasting outcomes, what are you betting on?