Clusterstock this morning has a great summary of a Minneapolis Fed paper, The Current Financial Crisis: What Should We Learn From the Great Depressions of the Twentieth Century.  Clusterstock simply titles their post, How To Cause Great Depressions.  The two salient points:

1. Seizing and breaking up insolvent banks while reprivatizing strong ones is expensive, but it works.  See Chile and Finland.
2. Nursing insolvent banks and unproductive firms along leads to a Great Depression.  See Mexico and Japan.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: