Most economists, to the extent that they think about the subject at all, regard the Great Depression of 1930´s as a gratuitous, unnecessary tragedy. If only Herbert Hoover hadn´t tried to balance the budget in the face of an economic slump; if only the Federal Reserve hadn´t defended the gold standard at the expense of the domestic economy; if only officials had rushed cash to threatened banks, and thus calmed the bank panic that developed in 1930-31; then the stock market crash of 1929 would have led only to a garden variety recession, soon forgotten. And since economists and policymakers have learned their lesson ... nothing like the Great Depression can ever happen again.
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Or can it?
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