Sunday, January 22, 2012

How Austerity Cured 1920-21 Depression

Great article in the Sunday Washington Post by James Grant on the depression of 1920-21 and how after President Warren G. Harding’s response, “the unemployment rate fell from 15.6 percent to 9 percent (on its way to 3.2 percent in 1923), while constant-dollar output leapt by 16 percent. After which the 1920s proverbially roared.”

And how did the administration of Warren G. Harding, in conjunction with the Federal Reserve, produce these astonishing results? Why, by raising interest rates, reducing the public debt and balancing the federal budget.

- More Here

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