The Great Depression
From my latest essay.
I would have thought that 1929 should have looked pretty good to people living in the depths of the Depression. But one of the many interesting lessons of Amity Shlaes’ new history of the Great Depression and Franklin Roosevelt’s New Deal is that many Americans, both inside and outside the Roosevelt Administration, thought of prosperity as an aberration. Instead, they saw hard times as the new norm.
The essay came out on TCS today. It would have come out earlier this week, but their site was hit by a hacker from overseas and was down. TCS was also blacklisted as a site that hosts “malware,” but that came from the hack and I am told that the site is now clean.
I have said many times that I view the Depression as an extremely important episode that merits deep study. So I am looking forward to reading Randall E. Parker’s latest book of interviews with economists, This time, he talks to economists born after the Depression. James Hamilton offers a sneak preview.
there’s an implicit view that the relative price of gold isn’t going to move very much, that it is basically limited by the supply of mining and so the relative price doesn’t change. If the relative price of gold is kind of volatile and wild, it’s a terrible system to use because then you’re imposing all of this same volatility and wildness on the aggregate price level and we pretty clearly don’t want that. So I would say that’s an important thing he’s left out. All the other aspects he discusses, the maldistribution of gold and problems with cooperation, all of that I would translate into the factors that were causing the relative price of gold to go up and therefore any country that was sticking to the gold standard to experience a severe deflation.
There’s more at the link. I expect to have more to say on Parker’s new book next week.