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Mix-Ansicht- Stahl - The Bush Administration's Steel Tariffs - A Recipe For Stagflation? - Cosa, 04.06.2002, 10:35
Stahl - The Bush Administration's Steel Tariffs - A Recipe For Stagflation?
Hi!
Gold ist zwar interessant, aber was sich da bei Stahl momentan anbahnt, ist auch nicht zu vergessen - ein hausgemachter Engpass und steigende Stahlpreise mit der Option auf steigende Produzenten- wie Verbraucherpreise.
<font size="4">The Bush Administration's Steel Tariffs - A Recipe For Stagflation?</font>
May 31, 2002
Today's WSJ had an article (not on the op-ed page, mind you) about President Bush's steel tariffs. The article dealt with the recent rise in the price of steel and the deleterious effects that it is having on output and employment in steel-using industries. By themselves, the steel tariffs would have a stagnating impact on US economic growth. In conjunction with an"enabling" Fed, they will have an inflationary impact in the US economy. Thus, we have a recipe for some stagflation in the US economy.
The chart below shows what has been happening to steel and aluminum prices in the past year. In the week ended May 24, scrap steel prices are up almost 25-3/4% versus year-ago. In contrast, aluminum prices are down about 13-1/2%. Now, if the rebound in manufacturing activity this year were the major factor pushing up steel prices, wouldn't aluminum prices also be rising in tandem? The fact that we have this divergence in price trends is prima facie evidence that the Bush administration's steel tariffs are an important element in the rise in steel prices.
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An increase in an import tariff represents a negative supply shock to the importing country. It means that at a given price, less of that imported good will be available for purchase than before. This is the definition of a shift back in the supply curve of the good in question. Less supply means less output, hence the propensity toward economic stagnation. As some of the steel users said in today's WSJ article, they are cutting production and laying off people. Now, if these steel users could raise the selling price of their products to compensate their profits for the higher price of steel, they would not have to cut production and payrolls as much.
In the absence of steel-users' pricing power, the rise in the price of steel is not inflationary. The price of steel has risen, but the prices of other goods and services are likely to fall enough to keep the general price level steady (or increasing at the same rate it was prior to the imposition of the steel tariffs). Why will these other prices fall? Because of production cuts in steel-using industries, less of other goods and services used in their production will be demanded. And, those being laid off in the steel-using industries will cut back on their demand for goods and services.
Evidently, the steel-using industries can't effect a price increase for their output currently. Here's where Alan Greenspan is likely to work his mischief. That is, here's where some inflation can be generated. Greenspan will observe that production is faltering and unemployment is rising. Because his policy modus operandi is to react to incoming production and unemployment data, Dr. Greenspan's likely policy response will be to print more money in an effort to stimulate production and employment. The printing of more money will stoke the demand for goods and services, some of which are the products produced by steel users. This increased demand for their products will allow steel users to increase their output and employment and raise the prices of their output. Those offsetting price decreases on non-steel goods and services will now become price increases thanks to the extra aggregate demand induced by Alan's"money machine." In this case, then, Greenspan will have converted the relative price increase of steel into a general price level increase.
In sum, given the likely response by the Fed, the imposition of steel tariffs will worsen the trade-off between economic growth and inflation. George and Alan, if you keep it up, you could rival the stagflation"feats" accomplished by Richard and Arthur.
Paul Kasriel
Director of Economic Research
">http://www.northerntrust.com/librar..._research/weekly/us/020531.html] Quelle
Gruss
Cosa
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