Organizations and Markets

Macroeconomics Quote of the Day

5 December 2008 at 12:37 am Peter G. Klein 1 comment

| Peter Klein |

From Gary North (thanks to Dennis Lubahn):

Ben Bernanke . . . spent his career studying Milton Friedman’s now-dominant 1963 interpretation of the failure of Federal Reserve Policy, 1930-33, in not reversing the Great Depression. The FED did not inflate, Friedman said. This was in contrast to Murray Rothbard’s 1963 interpretation of the same era. He argued that the FED did inflate, 1924-29, which created the boom that busted in 1929. Had Bernanke studied Murray Rothbard’s 1963 book on Federal Reserve policy as the cause of the Great Depression, he might have had a very different career, perhaps teaching in a community college in North Dakota.

Of course, Rothbard’s approach to addressing the current crisis would be exactly the opposite of what has been done so far: stop inflating, allow interest rates to rise, encourage saving and capital accumulation, allow bankrupt financial and industrial firms to fail, etc. But we are all Keynesians now, right?

Entry filed under: - Klein -, Austrian Economics, Bailout / Financial Crisis.