Many chroniclers of the 1930s say the decade only really took on its doomed, chaotic character when major countries left the gold standard (Britain first in 1931, Italy last five years later).
Britain leaving the gold standard was the best thing we ever did. It allowed us to have a suitable monetary policy and we recovered all the lost GDP within two years. And the importance of this is:
Italy is back in recession and approaching deflation; Germany’s economy has shrunk and France stagnates. In Britain, we have a record number of jobs but plummeting real wages. Only the US – which borrowed massively, restructured its banks and printed money on a historic scale – enjoys anything like a sustainable recovery, and even that’s being sustained only by the promise that quantitative easing will go on ad infinitum.
The importance is that monetary policy matters. Milton Friedman was in fact correct. And Ben Bernanke and the BoE have been correct in following the Friedmanite prescription: and the ECB has been incorrect in not.
And yes, this is important: and it’s also nothing to do with anything else about Friedman’s views. But no one commenting upon these current affairs should be blathering on about them without grasping these basic points. The Fed caused the Depression (no, not the 1929 Crash, no, not the recession, but the Depression) through monetary policy and it didn’t happen this time around because the Fed got it right.
The importance being of course that someone needs to bang heads together at the ECB (and Bundesbank where, hilariously, they think there is actually loose monetary policy in the eurozone) and get them up to date, into the 21st Century, on money.