One year ago, Ben Bernanke presented a speech titled “Economic Policy: Lessons from History.”
I view this speech as highly noteworthy – epochal, even – especially in relation to the efforts made to “bring the economy back” from the depths of the Financial Crisis.
Here are some excerpts that I find particularly relevant:
“I draw four relevant lessons from the financial collapse of the 1930s; I will first list these lessons, then briefly elaborate. First, economic prosperity depends on financial stability; second, policymakers must respond forcefully, creatively, and decisively to severe financial crises; third, crises that are international in scope require an international response; and fourth, unfortunately, history is never a perfect guide.”
also:
“In the current episode, in contrast to the 1930s, policymakers around the world worked assiduously to stabilize the financial system. As a result, although the economic consequences of the financial crisis have been painfully severe, the world was spared an even worse cataclysm that could have rivaled or surpassed the Great Depression.”
also:
“That lesson brings me to the second one–policymakers must respond forcefully, creatively, and decisively to severe financial crises.”
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my comments: In June of 2009, I wrote a four-part “Depression” series. One part, posted June 22, was titled “Are We Avoiding a Depression?” In that post I discuss the issue from a logical perspective. It addresses many of the points Ben Bernanke spoke of in his aforementioned speech.
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The Special Note summarizes my overall thoughts about our economic situation
SPX at 1333.51 as this post is written