The Stunning Idiocy of Steel Tariffs

by Pater Tenebrarum
Acting Man

Victims of the Boom-Bust Cycle

The world is drowning in steel – there is huge overcapacity in steel production worldwide. This is a direct result of the massive global credit expansion that has taken place over the past 15 years. Much of this capacity is located in China, but while the times were good, iron ore and steel production (and associated lines of production) was expanded everywhere else in the world as well.

[…] Heavy industries like steel, which represent quite a high stage of the production structure, i.e. are temporally far removed from the consumption stage, are especially prone to falling prey to boom-bust cycles. In a fiat money system run by central planning agencies and supplemented by a fractionally reserved banking system, the amplitude of business cycles will be especially pronounced (readers may have noticed that systemic crises have become increasingly severe with every new iteration).

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