"This context highlights the importance of the 1920–1921 depression. Here the government and Fed did the exact opposite of what the experts now recommend. We have just about the closest thing to a controlled experiment in macroeconomics that one could desire. To repeat, it’s not that the government boosted the budget at a slower rate, or that the Fed provided a tad less liquidity. On the contrary, the government slashed its budget tremendously, and the Fed hiked rates to record highs. We thus have a fairly clear-cut experiment to test the efficacy of the Keynesian and monetarist remedies." – Robert Murphy
Today we dive into some economics with an example I have always liked from an economist who I always felt had a great way of explaining things simply. Robert P Murphy brings us a short, but strong argument on why the depression of 1920-1921 give us all the juxtaposition we need to disprove the long held beliefs of the Keynesians and the monetarists, and paint the Great Depression in a very, very different light. Don't miss it.
Choice: https://www.amazon.com/Choice-Cooperation-Enterprise-Human-Action/dp/1598132180
Use of Knowledge in Society: https://open.spotify.com/episode/1991IXoqxFGOFrQoHnR9a2?si=cc26e6506fd24262
Deflation and Liberty: https://open.spotify.com/episode/7h4a74WEs1ShShtmzCQSC1?si=7c76419170014ffe
Check out the original article at:
The Depression You've Never Heard Of: 1920-1921 - Foundation for Economic Education
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