Trying to Understand Our Current Situation

For the last several months I have done a lot of reading on financial meltdowns. I have read pretty widely including Robert Samuelson's The Great Inflation and Its Aftermath which explains the American lead up and response to the inflationary period of the late 1970s. Samuelson argues that our ability to surmount such inflationary problems going forward may be compromised. I also read The Panic of 1907 which is a scholarly work by two professors on a financial panic that led to the development of the Federal Reserve. I began the process with Amity Schlaes The Forgotten Man which is a major reassessment of the policies of FDR that argues that his policies did not take us out of the depression of the 1930s.

I keep coming back to the depression of the 1930s because a lot of commentators on the left (for example Paul Krugman) argue that we are in a new depression. The Great Depression and the New Deal by Eric Rauchway who is historian at UC Davis. The Depression is a hard subject to cover briefly. That is true for multiple reasons. First, there are a lot of myths on both sides of the political aisle. Some supporters of Keynesian interventions date the beginnings of their "proofs" on the efficacy of those policies to FDR. Critics of Keynesian policies have written, in my opinion, dispositively about the ineffectiveness of those policies.

What Rauchway accomplishes is a concise description of the events leading up to the depression and then a clear explanation of the policies that made up FDR's bag of tricks. I suspect he is a bit more sympathetic toward those policies than I. But for what the book was trying to accomplish - give a short history of the period - it does it superbly.

I should admit that I am not a big fan of the Santayana quote (Those who cannot learn from history are doomed to repeat it.)at least as some tend to use it. That stems from a belief that the conditions of each age have unique aspects. While we can learn about other periods we need to construct policies that fit the conditions of the age. Responding to the critical issues facing us today, will indeed take some understanding of other eras of financial decline. But we will also need to understand the specific conditions that led to our problems at this time. If you are interested in understanding a timeline of the period leading up to the 1930s and through it Rauchway's book is an excellent place to start.