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Are tariff's the answer?

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  • Are tariff's the answer?

    If the root of our current problems are unchecked global imbalances (savings in the east - Japan and now China) and over-consumption in the west (due to the East's savings being put to work as credit in the west and so high asset prices - bubbles - based on low interest rates) ... maybe tarrifs are the answer...


    Squinting hard it seems to me that we're getting the opposite of what we need: heavy stimulus in debtor nations will only exacerbate the situation. Or I suspect is simply beating a dead horse: the insolvent US consumer. Maybe we should all be focused on Chinese stimulus packages?

    So why won't this happen? Why is the solution so far out of reach? Because arriving there requires passing through maximum short term pain. (For China: easing off the mercantilist policy. For the US: accepting the sunset of dollar hegemony.) Not a risk reward ratio politicians can ever contemplate much less embrace.