Return to Frugality Is a Dangerous Transition: Chris Farrell

“Transitions are dangerous,” said the late Charles Kindleberger, an economic historian with a vast knowledge of financial manias, panics and crashes, in 1983. That was No. 9 of 10 lessons he summarized from 1929.

He noted that pursuit of smart public policy in the tumultuous early years of the Great Depression was handicapped by three transitions: The 1928 death of Benjamin Strong, the forceful head of the Federal Reserve Bank of New York, led to power passing to the Federal Reserve in Washington, a more timid group of central bankers; the electoral victory of Franklin D. Roosevelt over the incumbent Herbert Hoover; and the difficult transition of international economic hegemony from the world of Pax Britannica to Pax Americana.