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James Grant: “The Forgotten Depression of 1921: The Crash That Cured Itself” @googletalks

James Grant: “The Forgotten Depression of 1921: The Crash That Cured Itself” @googletalks

Published on May 19, 2016

The Forgotten Depression tells of the slump of 1920-21: high unemployment, collapse in commodity prices, upsurge in bankruptcies and sharp break in stock prices. Unlike the Great Depression, the 1920 affair was over in 18 months. What explains its brevity? James Grant is founder of Grant’s Interest Rate Observer and has appeared in The WSJ, Claremont Review of Books, and Foreign Affairs, as well as on TV on Sixty Minutes, Charlie Rose and Wall Street Week.

The Forgotten Depression of 1921: The Crash That Cured Itself

By the publisher of the prestigious Grant’s Interest Rate Observer, an account of the deep economic slump of 1920–21 that proposes, with respect to federal intervention, “less is more.” This is a free-market rejoinder to the Keynesian stimulus applied by Bush and Obama to the 2007–09 recession, in whose aftereffects, Grant asserts, the nation still toils.

James Grant tells the story of America’s last governmentally-untreated depression; relatively brief and self-correcting, it gave way to the Roaring Twenties. His book appears in the fifth year of a lackluster recovery from the overmedicated downturn of 2007–2009.

In 1920–21, Woodrow Wilson and Warren G. Harding met a deep economic slump by seeming to ignore it, implementing policies that most twenty-first century economists would call backward. Confronted with plunging prices, wages, and employment, the government balanced the budget and, through the Federal Reserve, raised interest rates. No “stimulus” was administered, and a powerful, job-filled recovery was under way by late in 1921.

In 1929, the economy once again slumped—and kept right on slumping as the Hoover administration adopted the very policies that Wilson and Harding had declined to put in place. Grant argues that well-intended federal intervention, notably the White House-led campaign to prop up industrial wages, helped to turn a bad recession into America’s worst depression. He offers the experience of the earlier depression for lessons for today and the future. This is a powerful response to the prevailing notion of how to fight recession. The enterprise system is more resilient than even its friends give it credit for being, Grant demonstrates.

The Forgotten Depression of 1921: The Crash That Cured Itself

James Grant: "The Forgotten Depression of 1921: The Crash That Cured Itself" @googletalks

Forgotten Depression