From The New York Times:
LORDS OF FINANCE The Bankers Who Broke the World
By Liaquat Ahamed
“We have involved ourselves in a colossal muddle, having blundered in the control of a delicate machine, the working of which we do not understand.” So wrote the great economic iconoclast John Maynard Keynes in an essay titled “The Great Slump of 1930,” published in December of that year. Thirteen months had passed since the crash of 1929; the world was living, in Keynes’s words, in “the shadow of one of the greatest economic catastrophes of modern history.” I shuddered when I read this quotation in “Lords of Finance,” a magisterial work by Liaquat Ahamed, a veteran hedge fund manager and Brookings Institution trustee. A grand, sweeping narrative of immense scope and power, the book describes a world that long ago receded from memory: the West after World War I, a time of economic fragility, of bubbles followed by busts and of a cascading series of events that led to the Great Depression.
The “delicate machine” Keynes referred to was of course the global economy. By 1930, when he wrote his essay, the West was in bad shape. A combination of divisive postwar politics, a refusal to abandon economic orthodoxy and a series of policy errors by the world’s four most important central banks — the Federal Reserve, the Bank of England, the German Reichsbank and the Banque de France — had led to the near collapse of capitalist economies in the West. “Industrial production had fallen 30 percent in the United States, 25 percent in Germany and 20 percent in Britain,” Ahamed writes. “Over 5 million men were looking for work in the United States, another 4.5 million in Germany and 2 million in Britain.”
And yet — and this is why I shuddered — it was also a moment not unlike the one we’re living through now.