View from 1932

"I have to believe that when things are bad I can change them."

--Jim Braddock (Cinderella Man)

I'm making my way thru Garet Garrett's The Bubble That Broke the World. Written in 1932, it was Garrett's attempt to explain to the everyday person the causes behind the economic collapse that had engulfed the planet.

In addition to the wonderful writing style (Garrett wrote for the Saturday Evening Post at the time), a primary strength of this book is that it was written while the dust was still in the air following the collapse. As such, it was not subject to the revisionism that often accompanies accounts written long after the fact.

Indeed, the small amount of time between event and assessment makes Garrett's grasp of the situation all the more remarkable and important.

I would recommend chapter 1, Cosmology of the Bubble (the fabu pyramid analogy for public spending projects), and chapter 2, Anatomy of the Bubble (how credit expands in the banking system and how speculation driven by credit ultimately unwinds to cause a collapse), to anyone seeking to understand the dynamics of intervention and the boom/bust cycle.

It is often said that those who fail to learn from history are destined to repeat it. Garrett's word tosses another straw onto the giant pile of evidence to support this claim. Change the date on this book, and it describes the most recent bubble that's breaking our world, and government errors in dealing with it.

References

Garrett, G. (1932). The bubble that broke the world. Boston: Little, Brown, & Company.