Coolidge's Error

Nick Carraway: You can't repeat the past
Jay Gatsby: Can't repeat the past? Why, of course you can.
--The Great Gatsby

These pages have argued that Calvin Coolidge may have been the best president of the Twentieth Century. He was not perfect, however. His gravest mistake involved presiding over a Federal Reserve that made credit too easy for too long while the Twenties roared.

At several points during the 1920s, the Fed eased credit conditions despite the booming economy. When they finally tried to tighten credit in 1928, stock and real estate markets did not respond. Instead they continued their upward spiral. In late 1929, of course, these markets finally came crashing down, ending one of the largest speculative benders in US history.

It is easy to draw parallels to today's situation. Despite information suggesting that the economy is on solid footing, the Fed maintains an ultra low interest rate policy. Stock markets are ringing all time highs almost daily. Speculators bid crypto constructs like Bitcoin to astronomical levels.

Stated differently, we are repeating Coolidge's error.