Economics and finance: The uses and abuses of history

Posted: February 16, 2015 in economy
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HAVE we forgotten the lessons of the Great Depression? That was one of the themes tackled by Barry Eichengreen, the economic historian, when he spoke this lunchtime at a Centre for European Reform event in the Clive room of the East India club (itself a venue with a degree of historical resonance). The Depression is a natural template since the 2007-09 crisis is generally perceived to be the worst economic crisis since the 1930s.But the problem with using historical examples is that there is rarely agreement on what history teaches. Indeed, there is rarely agreement on the facts. Even a simple statement such as “the Battle of Hastings took place in 1066” contains two inaccuracies and a piece of religious bias (the battle occurred a few miles from Hastings, 1066 is a date derived from the Christian calendar and is wrong, since Christ was not born in 1AD).The “Hollywood” narrative of the Depression is that it started with the stockmarket crash of 1929, which provoked little response from the unfeeling incumbent president, Herbert Hoover, and was only solved by the dynamism and enthusiasm of Franklin D Roosevelt and his New Deal (not to mention little orphan Annie). The monetarist school, led by Milton Friedman, blamed the Federal Reserve for allowing the banking system to collapse and the money supply to shrink; the last Fed chairman Ben Bernanke, a student of the era, …

via Economic Crisis


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