The Depresion of 1920

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The depression of 1920 was horrible so why have you never heard of it?  The drop in employment and economic output was much worse than the crash on 1929 that lead to the Great Depression but no one seems to know anything about it today. 

Well there is a reason why.  The government did not stimulate and the Federal Reserve did not inflate and the economy was on its way to recovery in less than a year.  This makes perfect sense if you understand Austrian Business cycle theory but modern economists mostly ignore this episode in American history.  If you want to promote large government and Federal Reserve inflation as cures to economic down cycles than you do not want people to hear about how economies seem to recover much faster from a crash when governments do nothing. 

 

Tom Woods explains the forgotten depression of 1920

http://www.youtube.com/watch?v=czcUmnsprQI

 

 

448 thoughts on “The Depresion of 1920”

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