… is from page 211 of James Grant’s excellent 2014 book, The Forgotten Depression, a volume about America’s experience with the depression of 1920-21 and the rapid recovery from that depression, a recovery not engineered, steered, or ‘stimulated’ by the state; here, Grant is writing about America in the years 1922-1929 – that is, the years leading up to the Great Depression (footnote deleted):
“[C]redit takes various directions,” observed the British economist H.F. Fraser in 1933, “and the effects of inflation can only be measured best at those points in the business structure where the use of credit has been most active.” In the 1920s, those points included capital investment, real estate and common stocks. “Stability,” according to a certain kind of index number, the Federal Reserve had achieved. Inflation had broken out in places where the stabilizationists weren’t looking.
Grant quite rightly criticizes both the Fed’s easy-money policy following the end of the “forgotten depression” of 1920-21, as well as Pres. Hoover’s economic interventions following the 1929 stock-market crash, including efforts to keep nominal wages from falling.
