The explanation of this book is that the 1929 depression was so wide, so deep, and so long because the international economic system was rendered unstable by British inability and U. S. unwillingness to assume responsibility for stabilizing it by discharging five functions:(1) maintaining a relatively open market for distress goods; (2) providing countercyclical, or at least stable, long term lending; (3) policing a relatively stable system of exchange rates; (4) ensuring the coordination of macroeconomic policies; (5) acting as a lender of last resort by discounting or otherwise providing liquidity in financial crisis.
Charles P. KindlebergerRelated topics
book coordination deep depression discharging distress five goods inability international last least liquidity maintaining market open policing stable wideRelated quotes
[The 1964 General Election] was a decision that not only our industrial system but every aspect of our national life that has been corrupted by the doctrine of a self-perpetuating establishment should give way to an open society where knowing your job would mean more than knowing the right people. It was a decision that national purpose should override sectional interest, that earning money took precedence over making money. It was a decision for change: not change for its own sake, but change, radical and dynamic, for economic and social purpose. It was a decision, in short, that Britain should have a government and that the government should govern.
Harold Wilson
I did say in print, in February, 1929 that there was no hope for economic recovery in Europe before American interest rates came down. That wouldn't be until the American boom collapsed - which was likely to happen within the next few months.And this did, in fact, happen in October 1929.
What made me expect this, of course, was one of my main theoretical beliefs - that an inflationary boom cannot be maintained indefinitely. I was sure that a very unstable situation was created by the artificial prolongation of the boom in 1927, when the Federal Reserve tried to stave off a collapse by credit expansion.
Friedrich Hayek
Until the last great war, a general expectation of material improvement was an idea peculiar to Western man. Now war and its aftermath have made economic and social progress a political imperative in every quarter of the globe. If we ignore this, there will be no peace. There has been a widening of horizons to which in the West we have been perhaps too insensitive. Yet it is as important as the extension of our vision into outer space.
Today continuing poverty and distress are a deeper and more important cause of international tensions, of the conditions that can produce war, than previously.
Lester B. Pearson
I think that we could agree on what kind of a world we would all want to build. it would be a world of independent nations, moving toward international community, each of which protected and respected the basic human freedoms. It would be a world which demanded of each government that it accept its responsibility to insure social justice. It would be a world of constantly accelerating economic progress - not material welfare as an end in itself, but as a means to liberate the capacity of every human being to pursue his talents and to pursue his hopes. It would, in short, be a world that we would be proud to have built.
Robert F. Kennedy
Market power and externalities are examples of a general phenomenon called market failure-the inability of some unregulated markets to allocate resources efficiently. When markets fail, public policy can potentially remedy the problem and increase economic efficiency. Microeconomists devote much effort to studying when market failure is likely and what sorts of policies are best at correcting market failures. As you continue your study of economics, you will see that the tools of welfare economics developed here are readily adapted to that endeavor. Despite the possibility of market failure, the invisible hand of the marketplace is extraordinarily important.
Greg Mankiw
