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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Moominoid who wrote (52017)	6/4/2006 2:05:39 PM
From: Elroy Jetson	Read Replies (1) \| Respond to of 116555

The problem is this perspective of the Great Depression, "bad economic policy which turned a minor recession into a depression", is that it doesn't look at the bubble before the bust. It assumes the ill-effects of one excessive debt creation can be easily fixed by creating a second one. As Harvard economist Joseph Schumpeter said, "Policy does not allow a choice between depression and no depression, but between depression now and a worse depression later. Inflation pushed far enough would undoubtedly turn depression into the sham prosperity so familiar from European postwar (WW-I) experience, and would, in the end, lead to a collapse worse than the one it was called in to remedy. For recovery is sound only if it does come of itself. For any revival which is merely due to artificial stimulus leaves part of the work of depressions undone and adds, to an undigested remnant of maladjustment, new maladjustment of its own which has to be liquidated in turn, thus threatening business with another worse crisis ahead."