Currency Wars Lead To Trade Wars Lead To World Wide Depression

Today the incoming Japanese Prime Minister Shinzo Abe followed through on his campaign promise to reflate the Japanese economy. He directed the Bank Of Japan to reach 2% inflation in the countries stagnant economy. Two percent does't sound very high? Fact is Japans inflation doesn't exist. Fact is the latest reading is -.4% So from there to 2% probably won't happen But it got him and his party elected and that's what he wanted.. During his campaign he pointed out that the  U.S. and the European Union's printing of money was the main problem for Japan's economic woes. The debased currencies of dollar and Euro were edging out Japan in the market place. Since most every major country in the world have similar products, it may come to just cost of goods and services as the deal maker or breaker.And that means relative currency valuations win the business. Trade has become a zero sum proposition There is just so many people and just so much discretionary income. ERGO .Gentlemen, start your printing presses.

And if cheap money doesn't do the trick? Then the next move by governments will be trade protection laws. That will lead to a contraction in global business and will force layoffs around the planet. Then the odds favor a depression and maybe a war being declared by the major economic powers to really generate business and instill brand loyality and to direct irate voter attention to foreigners and away from the local centarl governments.

How About a Slow And Local Nation?

Because it's the fate of the frivolous primate to relive unheeded history, how soon will the U.S. and the world reaquaint itself with the depths of another depression?

After the 1929 Crash and the subsequent 20% unemployment , the 1930 Smoot- Hawley Tariff Act was passed to create and save jobs for unemployed Americans. The Act raised tariffs on 20,000 imported goods. Business was against the legislation and over 1000 economists signed a petition urging President Herbert Hoover not to sign it. But he did and trade between the U.S. and others plunged 50% between 1930 and 1932 because other countries retaliated.

The prospects of a President Barack Obama pushing protectionism legislation through a rabid democratic Congress is certainly not farfetched. There are all kinds of policies that can kill jobs and exacerbate a financial downturn. Tax code and environmental policies attached to trade agreements can have the same effect as tariff increases. Of course a reduction in worldwide business activity would bring some benefits. The environment would have less destructive pressure put upon it. Also we here in America would have less melamine-laced pet and human food imported from the filthy Chinese.

A slow and local nation approach would bring relief from the dollar chase of of other peoples values.