March 03, 2004

Quote of the Day: Bernanke, a modern day FDR?

Ben Bernanke, giving credence to all the ideas that gold could be confiscated, arbitrarily priced, or outlawed. Bernanke blames gold for the Depression. It's probably to blame for the housing bubble, too. FRB: Speech, Bernanke--Money, Gold, and the Great Depression --March 2, 2004: "The finding that leaving the gold standard was the key to recovery from the Great Depression was certainly confirmed by the U.S. experience. One of the first actions of President Roosevelt was to eliminate the constraint on U.S. monetary policy created by the gold standard, first by allowing the dollar to float and then by resetting its value at a significantly lower level. The new President also addressed another major source of monetary contraction, the ongoing banking crisis. Within days of his inauguration, Roosevelt declared a 'bank holiday,' shutting down all the banks in the country. Banks were allowed to reopen only when certified to be in sound financial condition. Roosevelt pursued other measures to stabilize the banking system as well, such as the creation of a deposit insurance program. With the gold standard constraint removed and the banking system stabilized, the money supply and the price level began to rise. Between Roosevelt's coming to power in 1933 and the recession of 1937-38, the economy grew strongly."


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