Sunday, February 1, 2009

The Road to Depression

Tucked into the $819B Democratic Party Platform Bill (a.k.a---the (non)Stimulus Bill) are provisions that begin us down the road to restraint of free trade, protectionism, and ultimately economic depression.

The Fed and Treasury gangs have studied the Great Depression ad infinitum. The government was too tight with the money supply, it raised taxes as soon as things began to get good, and it enacted tariffs that brought international trade to a stop.

So far, the fed has executed superb monetary policy, doing everything possible to un-gum the credit markets. The jury is out on how fast the Obamites will look to raise taxes when things start to improve, so we've got to watch for that.

But these "Buy American" provisions....which prohibit the use of imported steel and other materials in any project funded by the bill...are just plain loony, and move us down the dangerous road to depression. Clearly the work of an unholy alliance of steel manufacturers and union laborers, these provisions just don't fly in the global economy. World trade, the movement of goods (and capital!) must continue...actually, it must be encouraged. All we need now is a trade war, and this global economy will go straight down the tubes.

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