{"id":35496,"date":"2018-06-26T06:33:40","date_gmt":"2018-06-26T11:33:40","guid":{"rendered":"http:\/\/olduvai.ca\/?p=35496"},"modified":"2018-06-26T06:33:40","modified_gmt":"2018-06-26T11:33:40","slug":"trade-tariffs-wont-crash-the-world-economy-monetary-policy-will","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=35496","title":{"rendered":"Trade Tariffs Won\u2019t Crash the World Economy, Monetary Policy Will"},"content":{"rendered":"<h3 class=\"page-title\"><a href=\"https:\/\/mises.org\/wire\/trade-tariffs-won\u2019t-crash-world-economy-monetary-policy-will-1\">Trade Tariffs Won\u2019t Crash the World Economy, Monetary Policy Will<\/a><\/h3>\n<h2 class=\"page-title\"><img decoding=\"async\" style=\"color: #333333; font-size: 16px;\" draggable=\"false\" src=\"https:\/\/mises-media.s3.amazonaws.com\/styles\/slideshow\/s3\/static-page\/img\/puzzle-2500328_1920.jpg?itok=lpfDJtCN\" alt=\"puzzle-2500328_1920.jpg\" \/><\/h2>\n<div class=\"body-content clearfix\">\n<p>As the Trump administration announces 25% tariffs on over $50bn of Chinese goods, and Europe and China prepare retaliation measures, <a href=\"https:\/\/www.economist.com\/leaders\/2018\/06\/21\/could-a-trade-war-derail-global-growth\" target=\"_blank\" rel=\"noopener\"><em>The Economist<\/em><\/a> concludes that \u201cRising tariffs are the worst of many threats to the world economy\u201d, because, among other things, \u201cTariffs temporarily push up inflation, making it harder for central banks to cushion the blow.\u201d\u00a0This statement displays a deeply entrenched confusion\u2014if not utter misunderstanding\u2014of some basic economic concepts. Most important, many people fail to correctly distinguish between the causes and effects of price inflation and those of monetary inflation.<\/p>\n<p>Monetary inflation is the increase in the quantity of money in an economy. This inflation causes the purchasing power of money to fall, which brings about price effects\u2014a general rise in prices of goods and services\u2014which we can refer to as price inflation. However, this general rise in prices following monetary inflation is disproportionate and staggered: prices will rise at different times and to different extents as money reaches a lower purchasing power.<\/p>\n<p>But monetary inflation also has non-price effects. One of these is the transfer of wealth between the last receivers of the new money toward the first receivers.<\/p>\n<p>Another\u2014and even more important\u2014is the distortion of the pattern of investment and production, as the new money being created through credit expansion reaches stock markets and businesses\u2014thus artificially reducing the interest rate. This latter effect explains the occurrence of production booms misaligned with consumer preferences, and the later, inevitable economic bust or crash. These price and non-price effects of monetary inflation are general and underline every possible economic activity.<\/p>\n<p>\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Trade Tariffs Won\u2019t Crash the World Economy, Monetary Policy Will As the Trump administration announces 25% tariffs on over $50bn of Chinese goods, and Europe and China prepare retaliation measures, The Economist concludes that \u201cRising tariffs are the worst of many threats to the world economy\u201d, because, among other things, \u201cTariffs temporarily push up inflation, [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2,5],"tags":[13232,7617,534,19291],"class_list":["post-35496","post","type-post","status-publish","format-standard","hentry","category-economics","category-geopolitics","tag-carmen-elena-dorobat","tag-mises-institute","tag-monetary-policy","tag-trade-tariffs"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/35496","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=35496"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/35496\/revisions"}],"predecessor-version":[{"id":35497,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/35496\/revisions\/35497"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=35496"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=35496"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=35496"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}