Does Anyone Deny That There Were Unprecedented Credit Stimulus Policies During Hoover Administration?
Here’s something I want to pin down. In my book on the Great Depression, I quote Lionel Robbins saying (I think in 1934) that central banks around the world had tried unprecedented measures to stimulate a recovery through cheap credit, and that this was a complete reversal of traditional central bank doctrine.
Then Daniel Kuehn gives us this quote from Hayek (“The Fate of the Gold Standard”) in 1932:
Although there can be no doubt that the fall in prices since 1929 has been extremely harmful, this nevertheless does not mean that the attempts made since then to combat it by a systematic expansion of credit have not done more harm than good. In any case, it is a fact that the present crisis is marked by the first attempt on a large scale to revive the economy immediately after the sudden reversal of the upswing, by a systematic policy of lowering the interest rate accompanied by all other possible measures for preventing the normal process of liquidation, and that as a result the depression has assumed more devastating forms and lasted longer than ever before.
Lastly, FT Alphaville has a neat post out showing a bunch of commentary in the NYT from 1929-1933 (HT2 Krugman). A few of the people in there are complaining of what they consider to be unprecedented (not necessarily their term but it fits) credit stimulus.
So here’s my question: Do any of today’s Keynesians deny this? Obviously you think that these measures were woefully inadequate, in light of the shortfall in Aggregate Demand in the early 1930s. But I’m asking, do you agree with Robbins, Hayek, and the random Joes writing letters to the NYT, who at the time were claiming that the central banks of the world were fighting the downturn differently from how things were handled in previous crises?
Note well, I’m speaking here in absolute terms, not in a Sumnerian view whereby the Fed–by definition–has been “tight” the last few years because NGDP is below trend. Rather, I’m asking (for example) if it’s true that central banks in the early 1930s were actively trying to ease credit (by lowering interest rates, setting up special asset purchases or loan programs, etc.) when they had never done things like this in earlier crises?