Friday, June 17, 2005

Jude Wanniski former advisor to President Reagan and coiner to the term "Supply-side Economics" reminds us that today is the 75th anniversary of the Smoot-Hawley Tarrif Act being signed into law by President Hoover.

On June 13, the Senate approves by two votes the measure to increase tariffs on more than 1,000 items and sends the bill to Hoover. On this news, the stock market breaks 14 points to 230, precisely where it was on the bottom on Black Tuesday, October 29. Hoover signs the bill [June 17] and stocks tumble again. The market slide does not end until Franklin Roosevelt, a tariff foe, is nominated by the Democrats in 1932.

Wanniski is the only person to adequately explain the cause of the Great Depression and, of course, is ignored or insulted by all of the demand-side economists who can't explain it except by invoking "bubbles" and "speculation."

Read his explanation at the
link above and meditate on the sense it makes.

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