Free Banking » Anti-Bernanke

“Speaking of the Fed’s first years, I myself chuckled at hearing Bernanke say, matter of factly, that “The Fed was established in 1914, and for while life was not so bad,” as if the Fed did a dandy job until 1930 or so. No mention of the high inflation before 1921–as high as 40%, on an annualized basis, during some quarters; no mention of the record numbers of bank failures throughout the 1914-1930 period; no mention of the sharp recession of 1920-21; and no mention of any possible contribution by the Fed to the stock market boom (or “bubble,” as Bernanke would have it) of the 1920s. Rather less amusing was his quotation of that “famous statement by Andrew Mellon” about liquidating stocks etc.: poor Mellon never said it, in fact: the words were Hoover’s, and were intended as parody. But why waste a perfectly good straw man? Besides, those lazy GWU students will never check.”

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