A outra Grande Depressão dos anos 20

"Between 1921 and 1922, there was a significantly faster drop in prices and GDP and a greater rise in unemployment than between 1929 and 1930. From 1921 to 1922, Unemployment advanced from 4 percent to twelve percent, the gross national product fell by a staggering 17 percent. All this was in one year. By contrast, unemployment was still well under 10 percent at the end of 1930.

Hoover may not have started his expansionary fiscal policy until later when, for example, he ramped up agricultural loans in 1930 and 1931 but his began his ultimately more destructive high policy only a month or so after the Crash.

During that period, he called the first of several White House conferences. He successfully used these to pressure employers to maintain nominal wage rates. Henry Ford actually raised wages for his workers after attending. Later, Hoover reinforced this high wage policy through Smoot-Hawley (which kept out low wage competition) and Davis-Bacon (which required prevailing (e.g. union) wages for federal contractors. The upshot, as I said, that nominal wages did not begin to fall into 1931 and real wages were actually 12 percent higher in 1932 than they had been in 1929. Even Keynes, Krugman's hero, often commented that "downward stickiness" of wages had not occurred during previous depressions.

By contrast, Harding allowed wages, prices, profits, and the GDP to fall relatively unobstructed from 1921 and 1922. As a result, by the beginning of 1923, unemployment was down to 1921 levels. By allowing the malinvestments to readjust, Harding, unlike Hoover, had prevented a very steep initial downturn from turning into a decade long depression." An Answer to Critics: 'Krugman's Prescription for Disaster', by David T. Beito