I was listening to Dr. George Grant's Gileskirk lecture on the Great Depression the other day (the 2001 edition, available from WordMP3.com) and was struck by his list of the steps taken by the Federal government to avoid or stave off depression.
According to Grant, first the Federal Reserve expanded the money supply in the US 62 times from 1920 to 1929. When the inflation caused a downturn in the market, Hoover tried some interference strategies to hold off the stock market crash. This was designed to prop up the market. It resulted in a massive loss of confidence in the market and sped up the depression instead of thwarting it. In 1931 Hoover launched a massive spending program to try to "outspend" the depression. Finally, when all this caught up with the treasury, Hoover had to put a very large tax hike in place to stop the bleeding. This obviously did not help, as we all know from our parents, grandparents, and the history books.
I wonder how much inflation has been happening in the last decade. The reason this concerns me is that our current stimulus package reminds me an awful lot of Hoover's spending program to try to revitalize the economy in the 1930's.
We apparently learned nothing from the Great Depression. But then, when do we?
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