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Learning lessons from history

Business Times - 24 Oct 2008

By LEON HADAR
WASHINGTON CORRESPONDENT

THOSE who cannot remember the past are condemned to repeat it, warned the American (Spanish-born) philosopher George Santayana. Does this mean that those who remember the lessons of history are not likely to repeat the mistakes of the past?

In their response to the current financial crisis, American and European officials seem to want to show that, indeed, they have learned the lessons of the financial crash and the ensuing Great Depression of the 1930s, and that they are doing their best not to embrace the kind of disastrous policies that their predecessors in Washington, London and Berlin had adopted at that catastrophic time in history.

Hence, Federal Reserve chairman Ben Bernanke, a student of the Great Depression, has made a special effort not to reproduce the blunders that were made by the US central bank in the 1930s when it tried to deflate the supply of money by, among other things, raising interest rates.

And…