What caused the stock-market crash of 1929 and the Great Depression that followed?
This book blows away the conventional interpretations, not only in its contents but that the book exists at all. The Bubble that Broke the World was written in 1931. Author Garet Garrett ascribes the crash to the pileup of debt, which in turn was made possible by the Federal Reserve's printing machine. This created distortions in the production structure that cried out for correction. So what is the answer? Let the correction happen and learn from our mistakes.
Such is the thesis of the great Garet Garrett. But take note: this book was a big seller in 1931. In other words, two years before FDR arrived with his destructive New Deal, ascribing the Depression to capitalism and speculation, Garrett had already explained what was really behind the correction.
We are still fighting an uphill battle to explain the true causes of stock-market crashes and economic recessions, especially the Great Depression. But here in this wonderful book is an actual contemporary account that spelled it out plainly for the world to see.
No more can we say that people back then could not have understood. Garrett told them. And thanks to this new edition of this classic and important work, he is telling us again today.
As I write this review, Greece is about to be bailed out, with the fate of the Euro hanging in the balance. Reading this work by Garet Garrett, the warnings were clearly there over 80 years ago, with debt piling up all over Europe after WWI, and many Americans buying their bonds.
The book is divided into the following chapters:
- Cosmology of the Bubble
- Anatomy of the Bubble
- On Saving Europe
- The Rescue of Germany
- Operating the Golden Goose
- The Gold Invention
- Book of Debts
With his unique blend of economics and history, Garrett lays out the facts of what transpired and why it was never sustainable. Sadly, the lessons were lost soon after.
These essays propose that WW1 and the European resentment that it was no longer the center of World Power was the root cause of the 1920's bubble. Europe begged America for help which was generously given but then resented and engaged in deceitful means to avoid repaying the debt. And it was that debt which ultimately lead to the bubble.
As I read the book I realized one easily could substitute "China" for "America" and "America" for "Europe". The more things change, the more they stay the same.
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