Wednesday, October 3, 2012

Tyler Cowen on Britain in the early 1920s


I don't know the British circumstances as well as the American circumstances. Cowen affirms the sentiment that Krugman made earlier about 1920-21 in the U.S. (citing me, in a couple instances) that the downturn doesn't hold a whole lot of lessons for us today. He seems to want to extend that point to Britain.

Again, I can't say for sure. But in his Tract on Monetary Reform, Keynes did differentiate between the performance of the Fed and the performance of the Bank of England, and he was more approving of the Fed's actions, recognizing it as a policy to eliminate the war-time inflation. If I recall (it's been a little while) he was not nearly as sanguine about the Bank of England's decisions at the time because he did consider the pound over-valued. Of course these frustrations grew into a more directed confrontation with Churchill in the middle of the decade.

Not that you have to agree with everything Keynes says, but you wouldn't do so badly in life if you did, either.


  1. Congratulations on being mentioned by Brad DeLong on Project Syndicate! You deserve it.

    As for the British circumstances, the British didn't do so well in the 1920ies, this is true. Other sources that can attest to this would include Ralph Hawtrey's Currency and Credit. However, you'd have to ask David Glasner for more information, as I'm not an expert on Ralph Hawtrey!

  2. What doesn't get recognized today is the geopolitical nature of the currency problem. At the time Britain was a banking hub, especially for it's colonies. The devaluation of the pound by wartime inflation had decreased the value of those investments by foreigners substantially. They were not happy about that. Churchill resumed the peg to gold at the pre-war rate in part to placate them and domestic savers.

  3. interesting! although I have no expert, but I want have to know more and more, on your blog just interesting and useful information. Keep it up!human growth hormone

  4. Ah, thanks for bringing this to our attention Daniel, though you are not going to like what I do with it. (In a hotel right now, giving a talk. But in in the fulness of time...)

  5. "Not that you have to agree with everything Keynes says, but you wouldn't do so badly in life if you did, either. "

    I'm pretty sure it is *impossible* to agree with everything Keynes says. Like Krugman, he is full of contradiction.


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