26. March 2023

Category: Investing


March 24, 202327min
(This is the last installment of a three-part essay. The other parts are here and here.) A Capital Bank As its title suggests, the best-known history of the RFC, James Stuart Olson’s (1982) Saving Capitalism: The Reconstruction Finance Corporation and the New Deal, 1933 -1940, is nothing if not a sympathetic review of that agency’s […]


March 20, 202327min
(This is the second installment of a three-part essay. The first part is here.) Big Engines that Couldn’t Although Hoover’s Reconstruction Finance Corporation (RFC) was “more largely a banker’s loan bank than anything else” (Ebersole 1933, 477), financial institutions were never the only firms eligible for its support. Railroads were an important exception from the […]


March 14, 202334min
(In writing this series, I allowed myself to skip over some topics. But now that I’m turning the series into a book, to be published by the University of Chicago Press, I have to close those gaps. The most important gap by far concerns the Reconstruction Finance Corporation. Although the RFC was originally established by […]


February 7, 202344min
What finally brought the Great Depression to an end? We’ve seen that, whatever it was, it took place not during the 30s but sometime between then and the end of World War II when a remarkable postwar revival occurred instead of the renewed depression many feared. We’ve also seen that, while postwar fiscal and monetary […]


December 19, 202221min
After an interruption due mostly to my move to Spain, I’m pleased to be back in the saddle again, wrapping up my series on the New Deal. I ended a previous installment of this series by observing that, despite many dire forecasts, the U.S. economy avoided a severe, post-World War II depression, and “appeared to […]


December 6, 202229min
My last post argued that, despite what Diamond and Dybvig’s famous theory suggests, bank runs have seldom proven fatal to otherwise sound banks. Instead, when people run on a bank, it’s usually because it’s already in hot water. In response to that post, a Twitter correspondent wondered whether the Panic of 1907—the proximate cause of […]


November 25, 202224min
The 2022 Nobel Prize in Economics is to be shared by Ben S. Bernanke, Douglas W. Diamond, and Philip H. Dybvig, “for research on banks and financial crises.” Diamond and Dybvig are best known for their 1983 article, “Bank Runs, Deposit Insurance, and Liquidity,” in which they claim to have shown that purely voluntary bank […]


November 21, 202246min
On October 10th, Douglas Diamond and Philip Dybvig won the Sveriges Riksbank Prize in Economic Sciences, sharing it with Ben Bernanke “for research on banks and financial crises.” According to the prize committee, Diamond and Dybvig’s research showed how the combination of borrowing short and lending long exposes even sound banks to runs, since the […]


August 31, 202231min
By the start of 1948, there could no longer be any doubt: the Great Depression wasn’t coming back. Instead of collapsing at war’s end, as many feared it would, combined government and private spending (as measured by nominal Gross Domestic Product) hardly budged between 1945 and 1946, and started climbing again thereafter. Consequently, as we’ve […]


August 30, 202220min
In a recent Bloomberg column, former New York Fed President Bill Dudley echoes a conventional Fed narrative, contrasting Fed interest rate cycles under two supposedly distinct Chairmen. “Powell will need to find a way to persuade [markets] that he has no intention of behaving like Arthur Burns (the Fed chair who relented prematurely in the […]