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Source link: http://archive.mises.org/7123/garrett-does-it-again/

Garrett Does It Again

September 10, 2007 by

It’s been a kick digging up all these lost books by Garet Garrett. What amazing insight he had in economics and politics! It turns out that he wrote a book in 1932 called The Bubble that Broke the World, now online. It is as the title suggests: a full scale analysis of the stock market crash, which he blames not on capitalism and market-driven excess but on credit expansion by the Fed. There are few paragraphs in here in which he even presents an outline of the Austrian theory of the trade cycle, though not by that name.

What I find remarkable about this: it demonstrates that the real cause of the cause was known by contemporaries, not only in scholarly circles but also in popular publishing. This book was a big deal, and widely circulated. The New Deal came along and seemed to wipe out any explanations other than the Keynesian one so that the credit cycle explanation had to make a second come back in the 1960s.


DickF September 11, 2007 at 1:43 pm

Today there are only two accepted theories of the Great Depression, Keynes and monetarism. Sadly most Austrians have fallen into the quantity theory of the monetarism camp rather than holding to the value theory of Mises. We need to revive the value theory.

David September 11, 2007 at 5:06 pm

Very interesting, Jeffrey. I noticed this book on Amazon.com after reading your last post on Garrett’s work. Good to see it available here.

By the way, how does Mises.org go about creating all these excellent online books? I’m assuming that you are scanning original hardbound copies and turning them into PDF files. It seems like you are able to create these online texts with with far less effort than say, Project Gutenberg, so I had to wonder.


Joseph Huang September 11, 2007 at 5:21 pm

I would assume they have high speed scanners similar to what google uses to digitize books.

jeffrey September 11, 2007 at 9:57 pm

We just stay after it relentlessly, day after day.

johng September 11, 2007 at 10:04 pm

I can see a credit expansion caused recession lasting 6 months, a year maybe. But twelve+ years? The Savings and loan mess in 1982 was cleared out in about about a year or so. I remember the empty strip malls in Texas sat for many years after but the economy grew just fine without them.

To talk about the depression and exclude mention of the Smoot Hawley tariffs and the worldwide retaliation is odd. I think the huge marginal tax rate increases in the US by Hoover and also in Germany also need to be mentioned in any discussion of he depression.

flix September 12, 2007 at 4:49 am

I agree with jhng. The bust was caused by the usual credit bubble, the 12 year long Great Depression was caused by the govt’s reactions. (And the breakdown of international division of labour)

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