The Four Men Who Caused the Great Depression
Or so Liaquat Ahamed argues.
The economic scholar and hedge fund adviser has written a popular history of the central bankers of the United States, Great Britain, France and Germany called "Lords of Finance: The Bankers Who Broke the World."
Its premise: The bankers' slavish and blinkered devotion to forcing a world forever changed by World War I back onto the antiquated gold standard caused and needlessly extended the Great Depression.
The Ticker has reviewed Ahamed's work, and you can read the entire review here.
Here's an excerpt (of the review, not the book):
"From the 1870s to 1914, the world's developed nations basked in a shimmering age of commerce. The European powers were at peace. Goods flowed home from colonies. The newly reunited United States was growing into muscular adolescence. And all of the world's major economies rested on a seemingly solid base: the gold standard.
But it proved to be a system in a snow globe, easily shattered. World War I broke the idyll and unhooked country after country from dependence on gold. They resorted to printing money to fund the war, leading to massive inflation, unemployment, political instability and general suffering across the Continent.
It's no wonder, then, that after the signing of the armistice in 1918 the world's four most powerful bankers -- a fraternity described in newspapers of the time as 'the world's most exclusive club' -- did everything they could to force nations back to the discipline of the gold standard.
It was a ruinous decision. As Liaquat Ahamed notes in Lords of Finance, all the gold mined in history up to 1914 'was barely enough to fill a modest two-story town house.' There simply was not enough of it to fund a global conflict or to allow economic recovery afterward."
February 13, 2009; 2:51 PM ET
Categories: The Ticker | Tags: Liaquat Ahamed, gold standard, great depression
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