May 09, 2008
"Lessons from the Great Depression" (Updated)

I gave a speech last night to the Phi Beta Kappa Association of the Mid-South on "Lessons from the Great Depression" and promised my hosts that I would post links to my sources and other resources on DOL. I summarized the received wisdom on the Depression (inept monetary policy) and then we talked briefly about credit expansion during the Q&A. Resources are below. NB: right after I saved this entry the first time, I saw James Hamilton's post from this morning asking "what if we'd been on the gold standard" today. It's now included among the links.

1. The online encyclopedia at has several articles on the Great Depression. I drew primarily from Randall Parker's "Overview of the Great Depression" and Frank Steindl's "Economic Recovery in the Great Depression," both of which I assign in my economic history class. Here is Professor Parker's website, where you can download the transcript of his one-hour interview with Ben Bernanke.

2. We discussed the case for and against the gold standard, though I didn't give the case for the gold standard the attention it deserves. Lawrence H. White (my co-blogger here at DOL) has a very good Briefing Paper for the Cato Institute in which he deals with common objections to the gold standard. For a more detailed debate about banking in theory and practice, here are articles by J.G. Hulsmann and Professor White on fractional-reserve banking. Here's James Hamilton's aforementioned post on the gold standard and how it might have worked today. Hamilton makes the important point that any country which can go on the gold standard can also go off of it. I remain in Professor White's camp in my support of free-market money. If you want to write contracts payable in gold, silver, euros, yen, or potatoes, go right ahead. Given the weak dollar. I might argue that the best-performing asset in my portfolio is the extra euro-denominated airport shuttle pass I accidentally bought in Amsterdam last year. But I digress.

3. We also talked about Robert Higgs and his contributions to the theory of "wartime prosperity," and we concluded that the conventional "World War II ended the Great Depression" explanation is at best wanting, at worst false. Here is his re-assessment of "wartime prosperity." His discussion of "regime uncertainty" and the institutional conditions that created the microeconomic disaster that was the New Deal and prolonged the Depression is available here.

4. Finally, we discussed the Clinton/McCain gas tax controversy and why that makes me pessimistic about the ability of the political system to produce constructive policy. Here's Bryan Caplan's defense of the Clinton proposal and N. Gregory Mankiw's evaluation of why economists should be concerned. Finally, here's the Colbert Report on the proposed gas tax holiday (courtesy of Greg Mankiw).

5. In addition to what we talked about last night, the internet is filled with resources exploring the Great Depression and economic policy more broadly. The Ludwig von Mises Institute maintains an excellent online audio and video archive; here are several lectures on the Great Depression. Auburn University economist Roger W. Garrison is perhaps the leading exponent of what is called "capital-based macroeconomics" or "Austrian Business Cycle Theory." His website contains numerous resources (including several entertaining Powerpoint presentations) in which he shows how credit expansion leads to economic instability.

Posted by Art Carden at 11:11 AM in Economics

The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it. -Adam Smith

Our Bloggers
Joshua Hall
Robert Lawson
E. Frank Stephenson
Michael C. Munger
Lawrence H. White
Craig Depken
Tim Shaughnessy
Edward J. Lopez
Brad Smith
Mike DeBow
Wilson Mixon
Art Carden
Noel Campbell


By Author:
Joshua Hall
Robert Lawson
E. Frank Stephenson
Michael C. Munger
Lawrence H. White
Edward Bierhanzl
Craig Depken
Ralph R. Frasca
Tim Shaughnessy
Edward J. Lopez
Brad Smith
Mike DeBow
Wilson Mixon
Art Carden
Noel Campbell

By Month:
February 2014
November 2013
October 2013
September 2013
August 2013
July 2013
June 2013
May 2013
April 2013
March 2013
February 2013
January 2013
December 2012
November 2012
October 2012
September 2012
August 2012
July 2012
June 2012
May 2012
April 2012
March 2012
February 2012
January 2012
December 2011
November 2011
October 2011
September 2011
August 2011
July 2011
June 2011
May 2011
April 2011
March 2011
February 2011
January 2011
December 2010
November 2010
October 2010
September 2010
August 2010
July 2010
June 2010
May 2010
April 2010
March 2010
February 2010
January 2010
December 2009
November 2009
October 2009
September 2009
August 2009
July 2009
June 2009
May 2009
April 2009
March 2009
February 2009
January 2009
December 2008
November 2008
October 2008
September 2008
August 2008
July 2008
June 2008
May 2008
April 2008
March 2008
February 2008
January 2008
December 2007
November 2007
October 2007
September 2007
August 2007
July 2007
June 2007
May 2007
April 2007
March 2007
February 2007
January 2007
December 2006
November 2006
October 2006
September 2006
August 2006
July 2006
June 2006
May 2006
April 2006
March 2006
February 2006
January 2006
December 2005
November 2005
October 2005
September 2005
August 2005
July 2005
June 2005
May 2005
April 2005
March 2005
February 2005
January 2005
December 2004
November 2004
October 2004
September 2004
August 2004
July 2004

Powered by
Movable Type 2.661

Site design by