22 Jan 2009

Liquidation vs. Stimulus: Lionel Robbins From 1934

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Another sneak peek from my forthcoming book… Check out this awesome quote from Lionel Robbins’ The Great Depression:

Nobody wishes for bankruptcies. Nobody likes liquidation as such. If bankruptcy and liquidation can be avoided by sound financing nobody would be against such measures. All that is contended is that when the extent of mal-investment and over-indebtedness has passed a certain limit, measures which postpone liquidation only tend to make matters worse. No doubt in the first years of depression, to those who held short views of the disturbance, anything seemed preferable to a smash. But is it really clear, in the fourth year of depression, that a more astringent policy in 1930 would have been likely to cause more disturbance and dislocation than the dislocation and disturbance which have actually been caused by its postponement?—Lionel Robbins, 1934

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