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.”
“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.”
“That lesson brings me to the second one–policymakers must respond forcefully, creatively, and decisively to severe financial crises.”
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.
The Special Note summarizes my overall thoughts about our economic situation
SPX at 1333.51 as this post is written