Not surprisingly, many modern economists who have studied the depression of 1920–1921 have been unable to explain how the recovery could have been so swift and sweeping even though the federal government and the Federal Reserve refrained from employing any of the macroeconomic tools — public works spending, government deficits, and inflationary monetary policy — that conventional wisdom now recommends as the solution to economic slowdowns. The Keynesian economist Robert A. Gordon admitted that ‘government policy to moderate the depression and speed recovery was minimal. The Federal Reserve authorities were largely passive.… Despite the absence of a stimulative government policy, however, recovery was not long delayed.’

Nothing sets the tone for some juicy blogging about Austrian School of Economics like Game One of the Cup Final and some fine Polish spirit.

via The Forgotten Depression of 1920 – Thomas E. Woods, Jr. – Mises Daily.

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