My article in today's Scotsman on the parallels between the Eurozone today and the run-up to the Great Depression in the early 1930s is here.
For those interested I drew on the following sources. On the specifics of the Great Depression I used - ex-head of President Obama's Council of Economic Advisers - Christina D. Romer's article prepared for the Encyclopaedia Britannica which is here. On the mechanics of the Gold Standard I refreshed my memory by reading the relevant bits of International Economics by Paul Krugman and Maurice Obstfeld. On the dimensions of the Wall Street Crash I revisited John Kenneth Galbraith's The Great Crash 1929. I also had cause to re-read, with profit, Irving Fisher's classic article on The Debt-Deflation Theory of Great Depressions which is here. On the lack of a relationship between sovereign debt and bond yields outside the Eurozone I used the OECD data that appeared in this earlier blog. The data for the assertion that manufacturing held up better in Scotland during the recent Great Recession is here. The graph is below
On 'cheap money' policy in the 1930s and the lessons for today see Nick Crafts Delivering growth while reducing deficits: lessons from the 1930s.
The situation in the Eurozone is very fluid. It is only 24 hours since I wrote the article but I would now augment the comment I made about the need for the ECB to act as a full lender of last resort with the observation that it may now be doing so but sotto voce. Gavin Davies has an excellent recent post in the FT on this. Only time will tell if this undeclared policy will work.
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