Nov 25, 2008

Alan Greenspan on the cause of the Great Depression

When business in the United States underwent a mild contraction in 1927, the Federal Reserve created more paper reserves in the hope of forestalling any possible bank reserve shortage. More disastrous, however, was the Federal Reserve's attempt to assist Great Britain who had been losing gold to us. ... The "Fed" succeeded: it stopped the gold loss, but it nearly destroyed the economies of the world in the process. The excess credit which the Fed pumped into the economy spilled over into the stock market - triggering a fantastic speculative boom. ... As a result, the American economy collapsed.

~ Alan Greenspan as quoted by G. Edward Griffin, The Creature from Jekyll Island, page 474

No comments: