My Money and
Banking class this week looked at the Great Depression. You can read a recent interview given by
Christina Romer, former chair of Obama’s Council of Economic Advisers, where
she reviews five books/articles on the Great Depression – click here. This interview gives a good overview
regarding the causes and cures of the Great Depression.
One thing which emerges
from Romer’s interview is that many economists have been drawing close parallels
between the Great Depression and the ongoing Great Recession. These parallels have been used to justify the
extreme policy interventions used by central banks and governments. As much as I like to see governments and economists
drawing lessons from economic history, one has to wonder whether we have been
hasty in drawing comparisons between the two episodes. Have our political leaders simply used the
Great Depression (and our fears of a repeat) as a justification to bail out
large financial institutions? Or has it been a stroke of genius / serendipity
to have experts on the Great Depression, such as Bernanke and Romer, at the centre
of policy-making?
