The Depression’s Unheeded Lessons

by Neil Irwin

Neil Irwin is a senior economics correspondent for The New York Times, where he writes for The Upshot, a Times site for analysis of politics, economics and more. He is the author of “The Alchemists: Three Central Bankers and a World on Fire,” about the efforts of the world’s central banks to combat the global financial crisis, published by the Penguin Press in 2013. Thumbnail Image - George L. Harrison, chief of the New York Federal Reserve from 1928 to 1941, and Ben Bernanke who served two terms as chairman of the Federal Reserve from 2006 to 2014

The global economy stood on the precipice, making the possibility of a descent into the horrors of the Great Depression — the despair our grandparents told us about — all too real. Then some brave leaders with a knowledge of history and names like Bernanke, Geithner and Paulson (or if you have an international bent, Trichet, King and Darling) stepped in, applied the lessons of that brutal period and pulled us back from the abyss.

That, anyway, is the oversimplified history of the crisis of 2008 that has become commonly accepted thanks to book-length journalistic narratives(one of which I wrote) and the memoirs of several major officials involved. To the degree that these officials are faulted, it is usually for the large budget deficits or multitrillion-dollar central bank balance sheets that resulted from years of interventionism and still haunt us.

Now one of the world’s leading economic historians, Barry Eichengreen, has come forth with an alternate view: Rather than hoist anyone to our shoulders for preventing another Depression, we should be more cleareyed about the ways in which global leaders did not really learn the lessons of the 1930s at all and made many of the same mistakes as their Depression-era counterparts.

Read entire article at NYT