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Forget the Great Depression, says Jim Grant, Bernanke would be wise to study the devastating...

Forget the Great Depression, says Jim Grant, Bernanke would be wise to study the devastating downturn of 1920-21 in which GDP fell 23.9% top to bottom. The response? The Fed allowed rates to rise, the government balanced the budget, and ... "something wonderful happened: Markets cleared, and a vibrant recovery began." Grant's opus against the Bank of Bernanke here.
Comments (8)
  • Conventional Wisdumb
    , contributor
    Comments (1802) | Send Message
     
    Ah yes. The "Forgotten Depression".

     

    Perhaps the fact that no one knows about it, is a lesson in and of itself.
    30 Mar 2012, 01:03 PM Reply Like
  • American in Paris
    , contributor
    Comments (5494) | Send Message
     
    Well, this recession was probably caused by the end of WWI. An entirely different situation from 1929.
    30 Mar 2012, 02:01 PM Reply Like
  • Conventional Wisdumb
    , contributor
    Comments (1802) | Send Message
     
    Instead of guessing - read about it.

     

    Even Wikipedia has an entry on it:

     

    http://bit.ly/vVLBmE

     

    I am not sure the cause matters as much as the result - deflation - and the solution which is the point of this SA current.
    30 Mar 2012, 02:20 PM Reply Like
  • Tack
    , contributor
    Comments (14321) | Send Message
     
    The problem with this assertion is that there's no proof of causality, i.e., that the growth following the short 1921 recession was prompted by the recession. It would be like me noting that after the October 1987 crash -- the largest one-day crash in market history, by far -- that the markets and economy grew almost continuously, but for a brief interlude in 1992, until 2000, so the logic would be that we should hope for a 21% down day, now, so we can grow to the stars.
    30 Mar 2012, 02:46 PM Reply Like
  • Conventional Wisdumb
    , contributor
    Comments (1802) | Send Message
     
    Tack,

     

    Who are you responding to?
    30 Mar 2012, 03:46 PM Reply Like
  • Tack
    , contributor
    Comments (14321) | Send Message
     
    CW:

     

    Sorry, that was directed toward the author. I use headers when addressing commenters, but guess I should add "author" to the list.
    30 Mar 2012, 03:53 PM Reply Like
  • frosty
    , contributor
    Comments (717) | Send Message
     
    The fact that 50-100 million died from Spanish flu worldwide between 1918-20 surely had some bearing on the economy as well as the end of WWI. Even today, take that many people out of the economy today and there would be significant repurcussions for several years.
    30 Mar 2012, 06:05 PM Reply Like
  • Angel Martin
    , contributor
    Comments (1355) | Send Message
     
    yes the 1921 recession/depression followed a war induced commodity boom, and then commodity prices crashed along with farmland and real estate prices... hmm, sounds familiar...
    31 Mar 2012, 11:13 AM Reply Like
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