Wednesday, April 22, 2009

Tim Geithner's a weak student of economic history

An astute reader of this blog sent me the following article:

Geithner urges global effort to tamp crisis

The article basically covers Treasury Secretary Geithner's message to Americans that we cannot get out of this economic mess alone. If this is truly his belief than he is a very weak student of history.

Back in the 1930s countries pursued their own policies in dealing with the depression and the countries that abandoned the gold standard (a de-facto stimulus) got out of the depression earlier than those that did not or, in the case where the gold standard was abandoned later. Economic recovery was independent of other nations' policies.

The chart below gives a timeline of when countries abandoned the gold standard and the economic performance that followed. (Chart courtesy of Brad DeLong's website.)

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