When More of the Same = “Very Different”
I sometimes feel like I’m living in some kind of bizarro world. Eichengreen and O’Rourke have done an excellent job at tracking the Second Great Depression. Here is the link for those of you who’ve been living in a cave. After showing us excellent graphs of falling industrial output, they graph the overall policy responses of governments and central banks in 1929 and 2009. Take a look:
Now the conclusion to draw from this surely is: “world governments and central banks are doing exactly the same as what they were doing in 1929 only on a bigger scale”. And yet, this is not the conclusion that E-O draw: “The good news, of course, is that the policy response is very different.” Bizarre, no?