Tag: protectionism

Macleans’ Desperate Globalists

By Gerold

WW III began long ago with the global elites waging economic warfare on the rest of us. The globalists are losing as demonstrated by the UK’s ‘Brexit,’ the election of Trump and Spain’s Catalan separatist movement. But, the “One Worlders’ are not going down without a fight.

Below is an example of the elite’s desperation. This editorial appeared in the December 2017 edition of Canada’s national news-magazine, Macleans. (Link)

In the print edition, it’s given the title “The Four Horrors,” but the online editorial is titled “Canada must step up to defend a globalized world.” I suspect they’re tailoring the title to their audience. Print media readers tend to be older, more conservative and age-blessed with a bit more skepticism than online readers who tend to toward youth and gullibility (except this blog’s readers, of course.)

Continue reading “Macleans’ Desperate Globalists”

Chilling ways the global economy echoes 1930s Great Depression era

Guest Post by John Coumarianos

Protectionism, shaky debt, and weak banking systems have consequences

Getty Images/Keystone/Staff
Huge crowds outside the Sub Treasury Building (now Federal Hall National Memorial) and the statue of George Washington, opposite the New York Stock Exchange at the time of the Wall Street Crash, October 1929. (Photo by Keystone/Getty Images)

One view of what caused the Great Depression in the 1930s is that the Federal Reserve failed to prevent a collapse in the money supply.

This is the famous thesis of Milton Friedman’s and Anna Schwartz’s A Monetary History of the United States, 1867-1960, and it was, more or less, the view of Ben Bernanke when he was chairman of the Federal Reserve.

The global economy today resembles that of the 1930s in several ominous ways.

Financial author Edward Chancellor recently called attention to a paper written by Caludio Borio, head economist at the Bank of International Settlements, that provides a fuller picture of the causes of the Great Depression. The paper also draws parallels between global economic conditions that led to the rise of protectionism in the 1930s and our situation now.

The paper’s thesis is that “financial elasticity” characterizes both the pre-Depression global economy and today’s global economy.  Elasticity refers to the buildup of capital imbalances such as money flows into emerging markets because of low rates in developed markets.

Free flowing capital to emerging markets

As Chancellor tells it, the gold exchange standard established in the 1920s allowed U.S. and U.K. bonds to be used together with gold in exchange transactions among central banks. This arrangement encouraged growth in foreign lending.

Specifically, the U.S. lent money to emerging markets in Latin America and Central Europe. Investors in the U.S. enjoyed higher returns for seemingly little extra risk as defaults were initially low.

However, lending standards began to loosen, and American investors brought their dollars home after the Fed hiked rates in 1928. Money flowed into U.S. stocks, among other things, which, of course were poised for a crash.

Continue reading “Chilling ways the global economy echoes 1930s Great Depression era”