NY Fed Publishes Article on Mistakes Made in Great Depression

link here to article

By 1937 the US economy seemed to be recovering from the Great Depression. Economists and policy makers became concerned about the potential for inflation and they made many recommendations that sound like what we are hearing today about the Great Recession. People see "green shoots" of recovery and concerns about deficits and inflation seem to trump concerns about high unemployment. The author asks whether a modern economist, transported back to 1937, would make the same recommendations that led to a double dip recession. He thinks that the answer is "no". In my view, he fails to account for the large number of economists who share the same conservative values that were dominant among economists in 1937. For many economists economics is like a religion and they are also aware of the sources of their income and access to power.