Tyler Cowen on Britain in the early 1920s


I don't know the British circumstances as well as the American circumstances. Cowen affirms the sentiment that Krugman made earlier about 1920-21 in the U.S. (citing me, in a couple instances) that the downturn doesn't hold a whole lot of lessons for us today. He seems to want to extend that point to Britain.

Again, I can't say for sure. But in his Tract on Monetary Reform, Keynes did differentiate between the performance of the Fed and the performance of the Bank of England, and he was more approving of the Fed's actions, recognizing it as a policy to eliminate the war-time inflation. If I recall (it's been a little while) he was not nearly as sanguine about the Bank of England's decisions at the time because he did consider the pound over-valued. Of course these frustrations grew into a more directed confrontation with Churchill in the middle of the decade.

Not that you have to agree with everything Keynes says, but you wouldn't do so badly in life if you did, either.