For many years people believed [...] that an economic cataclysm of the magnitude of the Great Depression could only have been the result of mysterious and inexorable tectonic forces that governments were somehow powerless to resist. Contemporaries frequently described the Depression as an economic earthquake, blizzard, maelstrom, deluge. All these metaphors suggested a world confronting a natural disaster for which no single individual or group could be blamed. To the contrary, in this book I maintain that the Great Depression was not some act of God or the result of some deep-rooted contradictions of capitalism but the direct result of a series of misjudgments by economic policy makers, some made back in the 1920s, others after the first crises set in - by any measure the most dramatic sequence of collective blunders ever made by financial officials.
Liaquat Ahamed tells the story of 1929, the Great Depression, and the bankers who broke the world in his Lords of Finance. He focuses extensively on the main financial protagonists of the time (most importantly: Hjalmar Schacht, Benjamin Strong, Montagu Norman, Émile Moreau) as well as their antagonists (mainly: Keynes) in order to recount the policy failures that led from the Paris peace conference in 1919 to German hyperinflation in the 1920s and ultimately to the bust of 1929 and the ensuing global depression. His book is a gripping piece of personalized historical writing.
Most eerily and pertinent for today are undoubtedly the many similarities of the situation in Europe at the moment with what happened at the time. While policy makers clearly have drawn some lessons from the past and the kind of complete societal and economic breakdown of the 1930s has not repeated itself, there are enough worrisome comparisons that still apply. Whereas today the PIIGS owe more than they will be able to pay, at the time it was Germany stuck in the same situation. And while back then it was the strict adherence to the gold standard that worsened the economic situation in the UK, US, and Germany, it is today the Euro, which forces Spain and others through a deflationary, low growth (even recessionary), high unemployment period.
Of course superficially comparable situations will not necessarily result in the same horrifying course of events, but a study of the past makes one also painfully aware of how much of déjà vû the structural monetary and financial problems of the European debt crisis really is.
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