Time to re-read Galbraith on the Great Depression
Where will 2008 fit into this collective conceit? Our autumn of disintegrating stock markets, disappearing credit and depressing unemployment numbers can not reasonably be compared to 1929 and its aftermath. Not really. Not yet. But as traders exude panic and worried Americans read their 401(k) statements and wonder when this equities elevator reaches the basement and how much their new president will be able to do about it, popular evocations of that distant year grow louder and more insistent.
And who better to turn to than the popular chronicler Mr. Galbraith? His theories often ruffled the establishment economists, but few could have exhumed the financial apocalypse with more wit and panache than he did in his book “The Great Crash, 1929.” Continuously in print, the well-respected if sometimes controversial history dealt with the consequences of high interest rates and lack of regulation, foolish adherence to gold standards and a maldistribution of income akin to today’s.
But the book is perhaps most intriguing for its depiction of the delusion that swept the culture, and the ways financiers and bankers, wishful academics and supine regulators willfully ignored reality and in the process encouraged the epic collapse of the stock market.
No dreadful year is the same as another, particularly when that year is an epochal disaster. But similarities can be discerned and parallels drawn between the culture of that time and the modern day, when bubble followed bubble even as champions of the market insisted that all was fine.
Mr. Galbraith wrote his book while the crash remained branded on the national consciousness. Quite a few Americans still feared stock bubbles and speculators, shared a desire to regulate the financial sphere and harbored the inchoate conviction that a financier’s wealth should not be conflated with wisdom. Mr. Galbraith offered his account as a sort of warning against regarding the manias of 1929 as ancient history.
“It is worth hoping,” Mr. Galbraith wrote, “that a history such as this will keep bright that immunizing memory for a little longer.”
Read entire article at NYT
And who better to turn to than the popular chronicler Mr. Galbraith? His theories often ruffled the establishment economists, but few could have exhumed the financial apocalypse with more wit and panache than he did in his book “The Great Crash, 1929.” Continuously in print, the well-respected if sometimes controversial history dealt with the consequences of high interest rates and lack of regulation, foolish adherence to gold standards and a maldistribution of income akin to today’s.
But the book is perhaps most intriguing for its depiction of the delusion that swept the culture, and the ways financiers and bankers, wishful academics and supine regulators willfully ignored reality and in the process encouraged the epic collapse of the stock market.
No dreadful year is the same as another, particularly when that year is an epochal disaster. But similarities can be discerned and parallels drawn between the culture of that time and the modern day, when bubble followed bubble even as champions of the market insisted that all was fine.
Mr. Galbraith wrote his book while the crash remained branded on the national consciousness. Quite a few Americans still feared stock bubbles and speculators, shared a desire to regulate the financial sphere and harbored the inchoate conviction that a financier’s wealth should not be conflated with wisdom. Mr. Galbraith offered his account as a sort of warning against regarding the manias of 1929 as ancient history.
“It is worth hoping,” Mr. Galbraith wrote, “that a history such as this will keep bright that immunizing memory for a little longer.”