There might have been some dismay that I failed to list tariffs [the Smoot-Hawley Act in 1930] as the 5th reason for the Great Depression in the 1930s. I did this deliberately, but I feel compelled to explain myself.

Herbert Hoover and Donald Trump have a lot in common. Both are members of the Republican Party. Hoover had the unfortunate experience of presiding over the inauguration of the Great Depression. He apparently was oblivious to what was going on. I am not a historian but it seems he was – along with most of Washington – very much in favor of “protectionism” as a powerful tool of economic policy. This was Republican Party policy. That Donald Trump appears to share the same delusion is amazing, to be honest. And Republicans in Washington do endorse this policy. This is despite the history, the dreadful history. I make policy so we will be OK, but this does not stop Trump and his acolytes from persisting with their delusion – that tariffs will create wealth in the American economy.

Herbert Hoover was incompetent, and so is Donald Trump. There are arguments for Trump understanding I am right, that he is TACO (Trump Always Chickens Out). That he wants to crash the market so his Jewish billionaire friends [they actually "own" him and control him him] on Wall Street can sell now and then buy when the market crashes – because of the tariffs

“Herbert Hoover was the 31st president of the United States, serving from March 4, 1929, to March 4, 1933. He took office after winning the 1928 presidential election and served a single term before losing to Franklin D. Roosevelt in 1932. His presidency is largely associated with the Great Depression, which began with the stock market crash of 1929.”

Manufacturing employment has been in decline for at least 40 years. The United States is becoming a “design bureau” but the jobs in the new “post-industrial” system are not appearing at a rapid pace, certainly not at a pace which is commensurate with the loss of jobs in the old economy. Artificial Intelligence [AI] is providing the foundation for this new and advanced economy. As are many other impressive technologies. So we are doing very well. The new American “design bureau” economy, as I have argued, will be much more prosperous than the one we now have.

Nonetheless this does not dissuade many – most notably Donald Trump – from attempting to preserve the old world, the old and obsolete economy. Herbert Hoover tried this, in vain. And so is Donald Trump.

“What effect did the Smoot-Hawley Act passed in 1930 have on the economy? The law raised the tariff by approximately 20%, prompting other countries to impose high tariffs on U.S. exports as retaliation. It led to U.S. exports falling from $7 billion in 1929 to $2.5 billion in 1932. Farm exports were down by one-third from their 1929 levels by 1933. International trade plummeted 65%.”

Wall Street understands that I am correct. I would even go so far as to argue that Wall Street scoffs at Donald Trump thinking that he knows better than me. Of course, I am not alone, I have a number of prominent economist friends, among them Jeffrey Frankel, who totally agree with me. My friend Markus Lusser (1931-1998) would certainly agree with me. He was president of the Swiss National Bank from 1988 until 1996. Great guy, we were good friends and we always shared our thoughts about the economy – with total honesty. Unfortunately he died of a massive heart attack in 1998.

So the argument is persuasive and pretty straightforward and simple: the Smoot-Hawley tariffs regime was brought in by Washington as a “proposed” panacea for the bust part of the boom/bust cycle.

Incredible! And it appears to be happening once again. Listen to my friend Jeffrey Frankel and I talk about this. Great interview, published here at destructivecapital.com on May 29, 2025. I would say it is almost inevitable that we suffer another economic depression – this time far worse than the 1930s. There were Hoovervilles, there will be Trumpvilles. I just called the Federal Reserve in Washington and left a message on their media line. What did I say? Today a sales guy at Best Buy in Santa Rosa told me that since January prices on technology in the store have risen about 30%. That's right, 30%! This was his testimony. His experience. I suggested to the Federal Reserve that dropping interest rates was inappropriate. We have the beginnings of hyperinflation. Unless TACO gets back into action. Will TACO do what needs to happen?

So tariffs in the 1930s did not cause the Great Depression, but they did serve to exacerbate the downturn – severely. OK that's my argument. Protect yourself from the massive forces acting on the economy! You got to protect yourself! That this is exactly the wrong policy is painfully obvious.

Wall Street will sell off – at least 50%. Probably more, it may even be as much as 90%. That's what it was in the early 1930s. Hilarious. We need protection! Boom/bust is alive and well. And I'm not dead from cancer, from lymphoma. Policy-making is alive and well. I am not going anywhere. I have some very high level friends at the International Monetary Fund in Washington. We will work hard. The trilateral entente – the United States of America + Russia + China – is our only path forward. Establishing this entente will effectively save us from catastrophe.