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Then when the crisis hit in the fall of 2008, the Fed was essential in helping to prevent a much more catastrophic meltdown. When his brother was diagnosed with epilepsy, he found himself acting as his brother’s caretaker.This book was fascinating on so many levels and offers a great perspective on dealing with difficult situations. For example, if I own a business and I see the government taking aggressive action, I might decide to invest today because I expect my sales to be higher in the future.Temin and Wigmore show that going off the gold standard was a very powerful signal that US monetary policy was going to be more expansionary in the future. The former chair of President Obama’s Council of Economic Advisers says we’ve learned that terrible downturns can still occur, but also that the right policy response can make a huge difference to the outcomeThe lessons of the Great Depression is our theme today.
Even when Roosevelt increased the Federal deficit in the mid-1930s, a move to budget surpluses by state and local governments meant that the net fiscal stimulus was much smaller.Brown’s famous conclusion, repeated in Chandler’s book, is: “Fiscal policy, then, seems to have been an unsuccessful recovery device in the ’thirties – not because it did not work, but because it was not tried.”How did this book affect your thinking about the response to the Great Recession of the late 2000s?Understanding the history of fiscal policy in the Great Depression certainly made me a strong advocate for a truly bold fiscal stimulus in early 2009.
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