The reaction of the US Federal Reserve was swift and dramatic. That of the Bank of England was more cautious and measured. And the European Central Bank responded to pressure to follow the US with a determined 'Non', or, more accurately, 'Nein'.You might think that libertarians like myself would favour the US position. It's the land of free markets, is it not?
Here's Jamieson again:
US central bank policy, certainly since the mid-1980s under Alan Greenspan, has always seemed especially sensitive to adverse stock market reaction, the memory of 1929-30 being hard-wired into the American financial mind.But the Fed doesn't seem to have learned the real lesson of the Great Depression:
Since it first appeared in 1963, it has been the definitive treatment of the causes of the depression. The book remains canonical today because the debate is still very alive.Plus ca change... Here we go again. Printing and printing, with the same inevitable result as in the 1920's.
Rothbard opens with a theoretical treatment of business cycle theory, showing how an expansive monetary policy generates imbalances between investment and consumption. He proceeds to examine the Fed's policies of the 1920s, demonstrating that it was quite inflationary even if the effects did not show up in the price of goods and services. He showed that the stock market correction was merely one symptom of the investment boom that led inevitably to a bust.