“Some economists believe that the Great Depression of the 1930s was aggravated by bad monetary policy and lack of American leadership. Britain was too weak to maintain an open international economy, and the United States was not living up to its new responsibilities.”

— Joseph Nye

Source: Understanding International Conflicts: An Introduction to Theory and History (6th ed., 2006), Chapter 7, Globalization and Interdependence, p. 218.

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Joseph Nye27

American political scientist 1937

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“The usual and basic Keynesian answer to recessions is a monetary expansion. But Keynes worried that even this might sometimes not be enough, particularly if a recession had been allowed to get out of hand and become a true depression. Once the economy is deeply depressed, households and especially firms may be unwilling to increase spending no matter how much cash they have, they may simply add any monetary expansion to their board. Such a situation, in which monetary policy has become ineffective, has come to be known as a "liquidity trap"; Keynes believed that the British and American economies had entered such a trap by the mid-1930s, and some economists believed that the United States was on the edge of such a tap in 1992.
The Keynesian answer to a liquidity trap is for the government to do what the private sector will not: spend. When monetary expansion is ineffective, fiscal expansion—such as public works programs financed by borrowing—must take its place. Such a fiscal expansion can break the vicious circle of low spending and low incomes, "priming the pump: and getting the economy moving again. But remember that this is not by any means an all-purpose policy recommendation; it is essentially a strategy of desperation, a dangerous drug to be prescribed only when the usual over-the-counter remedy of monetary policy has failed.”

Paul Krugman book Peddling Prosperity

Source: Peddling Prosperity (1994), Ch. 1 : The Attack on Keynes

“Historians now debate whether Britain had a ‘managed economy’ by 1939, the very term—die gelenkte wirtschaft—adopted by German economists in the 1930s to describe the Nazi economy.”

Richard Overy (1947) British historian

Source: War and Economy in the Third Reich (1994), p. 17

“Most economists, to the extent that they think about the subject at all, regard the Great Depression of the 1930s as a gratuitous, unnecessary tragedy.”

Paul Krugman (1953) American economist

Introduction
The Return of Depression Economics and The Crisis of 2008 (2009)

“I ask particularly that those of you who are now in school will prepare yourselves to bear the burden of leadership over the next 40 years here in the United States, and make sure that the United States — which I believe almost alone has maintained watch and ward for freedom — that the United States meet its responsibility. That is a wonderful challenge for us as a people.”

John F. Kennedy (1917–1963) 35th president of the United States of America

"Remarks at the Cheney Stadium in Tacoma, Washington (387)" (27 September 1963) http://www.jfklibrary.org/Research/Research-Aids/Ready-Reference/JFK-Quotations.aspx <br class="br">1963

“Without the expansion of a Mutual Enterprise economy responsible to communities and nature, this present boom will bust, creating a Greater Depression than that of the 1930's.”

Paul Glover (1947) Community organizer in Philadelphia, Pennsylvania; American politician

http://www.paulglover.org/9712.html (“Stock Market Long Range Forecast” HOUR Town, cover story), December 1997

“I believe that monetary policy has a chronic defect. It is asymmetric—it works better in restraining an economy than in stimulating an economy.”

Lawrence Klein (1920–2013) American economist

"Keynsianism Again: Interview with Lawrence Klein", Challenge (May-June 2001)

“It was a global depression, had many causes, the whole story requires you to look at the whole international system. But policy errors in United States, as well as abroad, did play an important role. And in particular as I said, the Federal Reserve failed in this first challenge in both parts of its mission. It did not use monetary policy aggressively to prevent deflation and the collapse in the economy, so it failed in its economic stability function. And it didn't adequately perform its function as lender of last resort allowing many bank failures and a resulting contraction in credit and also with the money supply. So, in that respect, again, the Fed did not fulfill its intended mission.”

Ben Bernanke (1953) American economist

Lecture 1: Origins and Mission of the Federal Reserve
The Federal Reserve and the Financial Crisis (2012)

“It is too early to assess the policies of the new German government. I can only say that the crisis has shown that the monetary union is incomplete and that the weaknesses need to be remedied. Germany helps the euro best by further strengthening its competitiveness and promoting growth.”

Mario Draghi (1947) Italian banker and economist

spiegel.de http://www.spiegel.de/international/europe/spiegel-interview-with-ecb-president-mario-draghi-a-941489.html.

“At best, in such depression times, monetary policy is a feeble reed on which to lean.”

John Kenneth Galbraith book The Great Crash, 1929

Source: The Great Crash, 1929 (1954 and 1997 https://openlibrary.org/books/OL25728842M/The_Great_Crash_1929), Chapter X, Cause and Consequence, p. 190

“The inability of business and political leadership to rise to new heights [required by the] unprecedented situation, [familiar to us now as the Great Depression.. urged for] bold policies…bold anything is needed at this time.”

Wallace Brett Donham (1877–1954) American academic

As cited by Drew Gilpin Faust, " Harvard Business School Centennial http://www.harvard.edu/president/speech/2008/harvard-business-school-centennial," at harvard.edu, October 14, 2008. <br class="br">"The Failure of Business Leadership and the Responsibility of the Universities", 1933

“Some economists believe that the Great Depression of the 1930s was aggravated by bad monetary policy and lack of American leadership. Britain was too weak to maintain an open international economy, and the United States was not living up to its new responsibilities.”

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Joseph Nye27

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