James Grant, in his book The Forgotten Depression—1921: The Crash That Cured Itself, explains the resilience of the free market. During the 1921 economic contraction, the government and the Fed got out of the way, and America was better for it.
The Mises Institute writes:
James Grant, of Grant’s Interest Rate Observer, recently joined us at our event in Stamford, Connecticut, to discuss his new book, The Forgotten Depression—1921: The Crash That Cured Itself.
If you’ve never heard of the Depression of 1921, it’s because the federal government and the (then new) Federal Reserve did the opposite of what they did in 2008: federal spending was cut, the federal budget was balanced, and interest rates were allowed to rise. In other words, real austerity measures were implemented. The result? A short economic contraction that healed itself.
If you want to understand why TARP stimulus, too big to fail bank bailouts, and quantitative easing make our current economic crisis worse, there’s nobody better than Jim Grant to explain.
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