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  (ARCHIVES)Back to Current
The Alchemist (08/08/2007)
By Al Thomas
CAUSE OF THE

NEXT DEPRESSION

Want to know what and who is the cause of the next Depression?

YOU are!

Huh!

Because you are not paying attention to what those ignoramuses in Washington are doing it will be your fault when the economy falls apart. The biggest ignoramus, Senator Charles Schumer, is proposing a new bill that will increase tariffs on Chinese goods. He says this will protect American manufacturers and American jobs. Get your head out of that dark place, Senator.

A tariff is nothing more than an indirect tax on all the American people. Tariffs protect industries that are inefficient and promote other countries to impose tariffs on American goods. In all of history there has never been a successful application of mega tariff policy. In fact each time it has added to the further decline of the country's economy.

In 1930 Congress in its stupidity passed the Smoot-Hawley legislation that was supposed to selectively tariff a few items, but the hogs in Washington ended up with 320 items that started a tariff war and magnified the sick economy of 1928 and 1929 and caused the Crash of '29 -‘32.

While the Bill was under discussion in 1929 more than one thousand economists petitioned Congress not to do it. Today we have economists petitioning again, but our bought and paid for representatives prefer to kowtow to those industries who give them money for the next election.

President Bush has tried to impose tariffs for the steel industry. Here is an industry that is notoriously inefficient and will not spend the money to update their facilities. Every duty dollar charged at our ports for imported steel will be paid for by you, the consumer. Does anyone believe steel companies will update their equipment as long as this tariff is in place?

The new bill is supposed to be aimed at China, but before the list of goods on the duty list is complete it will include scores of countries and thousands of items. Ask why are lumber, wheat and pharmaceuticals on this list right now? Every tariff has been put there by some politician at the request of one of his big contributors to protect their profits.

Protectionism is not only stupid, but also destructive to the economy. It protects the weakest industries and makes the consumer pay for their inefficiencies. To show one of the most stupid is the state of New York has a restriction that milk from New Jersey may not be sold in New York. Are they protecting NY citizens? Obviously there must be some big dairies lining the pockets of the politicians so they can add a few cents to each quart of milk. Now project this thinking onto the world market.

The true definition of tariff is "special privilege". If a new bill for more tariffs passes Congress it could be the straw that breaks the camel's back of our economy.

It is up to you to stop this before they create another disaster.

Al Thomas' best selling book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter and receive his market letter at www.mutualfundmagic.com to discover why he's the man that Wall Street does not want you to know. Copyright 2007 All rights reserved.

 

 

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