No doubt, in the economics literature somewhere, the aggressive protectionism of regimes like Japan and the Chinese will be compared to this red herring tariff act, passed as the depression of 29 39 was already unfolding, for overwhelmingly unrelated reasons connected with WWI and expansionism that followed.
They will carp that if only these free riders would let loose and reciprocate more freely, the situation with the world commercial situation would be hunky dory.
They, not we, have created the 'liquidity trap' bemoaned by some commentators. Here is what Stiglitz, referring to creating currency, paraphrased, said, sort of consistently with my comments here:
'banks were instead spending the money in more profitable areas by investing internationally in commodities and the emerging markets. Banks were also investing in foreign currencies which, Stiglitz and others point out, may lead to currency wars while China redirects its currency holdings away from the United States.'
Fiat currency wars: 'Swinging with a wet noodle'.
China directing its currency holdings away from the US is kind of like a liquidity abyss.
But this is all too abstruse for American politics, even though we need a scholarly statesman like Governor Perry to take the helm in conditions like this.
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