Back in 1929, the Great Depression was heralded by a crash on the New York Stock Exchange, which was followed by other exchanges. However, there were not so many then. Now, not only have US and European markets tanked, but so have Asian, showing that the malaise is worldwide. True, the 1929 crash was followed by a run on the banks, which has not happened. Besides, it is a very different banking system now. In 1929, the Gold Standard was universal; now all currency is fiat. Another major difference is that then President Herbert Hoover had nothing to do with the crisis, though his inability to steer the country out of it cost him re-election in 1932. Mr Trump, on the other hand, has caused the current crash, by the tariffs he imposed on all countries last week.
As feared, the tariff hikes are an ill-concealed attempt to engage China in a trade war. Despite loud protestations that it was not interested in a trade war, China met the US imposition of a 34 percent tariff in addition to the 20 percent imposed for alleged fentanyl trafficking, by imposing its own percent 34 tariff on the USA. The USA responded with a 50 percent tariff imposed because of the Chinese tariff. China accused the USA of trying blackmail, and it is being turned into a centre of opposition, by countries which, like Pakistan, dare not stand up to the USA, by imposing tariffs of their own. The total US tariffs on China have reached 104 percent, and China has not yet responded. China was already willing to talk with the USA, which may be what Trump wants it to do.
It should not be forgotten that some of the ill-effects of the Great Depression have already manifested themselves, such s the rise of the far-right Apart from that, the Depression only ended with World War II. Is that what it will take this time.to bring it to an end? Even if the world avoids major disaster, it should be clear that things have changed, perhaps as much as it changed during the Greats Depression (and World War II). It is not possible to discern whether there will be renewals in small areas, or bold new innovations.to meet this challenge, as well as that of climate change.
