Wednesday, November 4, 2009

Again: Everything You Know About The Great Depression Is Wrong!

Hu versus Sarkozy | Steve H. Hanke | Cato Institute: Commentary:

"There is no more reliable rule than the 95% rule: 95% of what you read about economics and finance is either wrong or irrelevant. Just reflect for a moment on the most frequently repeated lessons drawn from the Great Depression (1929-33). According to most accounts, the stock market crash of October 1929 was the spark that sent the economy spiraling downward.

"How could this be? After all, by November 1929, the stock market had started to recover, and by mid-April 1930, it had reached its pre-crash level. Contrary to the received wisdom, massive government failure — not the stock market crash — pushed the United States into the Great Depression. It was the Federal Reserve that ushered in that terrible nightmare. During the course of the Great Depression, the money supply contracted by 25%. This sent the economy into a deflationary death spiral, with the price level falling 25%."

Read all of it --it's not that long.

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