Raising the tarrifs may have been a cause for lengthening the Depression, but it certainly wasn't the cause of it. To be more specific:
"Yet the underlying cause of the Great Depression — as Milton Friedman and Anna Jacobson Schwartz argued in their seminal book A Monetary History of the United States: 1867-1960, published in 1963 — was not the stock-market crash but a "great contraction" of credit due to an epidemic of bank failures.
The credit crunch had surfaced several months before the stock-market crash, when commercial banks with combined deposits of more than $80 million suspended payments. It reached critical mass in late 1930, when 608 banks failed — among them the Bank of the United States, which accounted for about a third of the total deposits lost. (The failure of merger talks that might have saved the bank was another critical moment in the history of the Depression.)
As Friedman and Schwartz saw it, the Fed could have mitigated the crisis by cutting rates, making loans and buying bonds (so-called open-market operations). Instead, it made a bad situation worse by reducing its credit to the banking system. This forced more and more banks to sell assets in a frantic dash for liquidity, driving down bond prices and making balance sheets look even worse. The next wave of bank failures, between February and August 1931, saw commercial-bank deposits fall by $2.7 billion — 9% of the total. By January 1932, 1,860 banks had failed. "He's half-right. The Fed did take away credit and made it worse, but we got into this situation by doing what the article suggests! Cutting rates, making more loans and printing more paper money inflated the currency and caused a market bubble in the 20s, only to pop in the 30s. Ironically, Ben is using the exact same strategy and we can see it's not working.
Also, if anyone knows Elliot Wave Theory, we are on the c wave at the moment:
To explain, Wave 1 occured from 1915-1929, when we got out of the war and had the Federal Reserve start creating the first bubble. Since we returned from a World War, we also had the advantage of being the winner, so more industralization took place. But in 1929, the bubble popped and we entered wave 2. Wave 3 started when we entered WWII and as usually for Wave 3, is always the biggest climber. This was true in the 40s-60s, when we had mass industralization and all our competitors were literally blown to bits and picking up the pieces . In the mid 60s to the 80s, we entered Wave 4 and then from the late 80s to 2000, we had Wave 5. 2000-2002 marked the a Wave correction, 2003-2005 marked the b Wave and 2005-2006+ started the c Wave.
Now, what's the point of all this? If the Elliot Wave is true (and you can look at the chart) then the c Wave correction stops at where Wave 4 ended. To put that in perspective, the Dow Jones at the end of the late 80s was around 800-1000 points. Right now, it's over 9000 points. That means we haven't even seen the poo hit the fan. We are potentially facing a 90% devaluation of stocks over the next few years.
Could have this been averted? I think so. Stocks tend to follow an equilibrium pattern like this (kind of like how nature works), but it would be a lot less severe if we didn't run on a nation of credit. Eliminate the Federal Reserve, use gold & silver backed currencies and put the control of money back in the hands of the people instead of the government or private organization.
The only thing we can really do is hold on tight and wait for it to self-correct. No amount of "rescue packages" are going to stop the market from self-correcting.