The Fed hiked their discount rate from 4.75 to 6% in 1919 and up to 7% in 1920 and did not cut it until 1921. Unemployment reached an 11.7% peak in 1921 but declined rapidly thereafter.

The period from 1923 to 1929 was among the most prosperous in American history.

On the other hand, after the 1929 crash and continual government intervention starting first with Hoover and continued and expanded by FDR with his New Deal legislation et al, the Fed lowered it lending rate to 1.5% in 1930 and kept it low.

Meanwhile, unemployment continued to be double digit throughout the 30′s peaking at 24.9% in 1933 and returning to nearly 20% (19.8%) in 1938. Unemployment averaged 18.36% from 1930 to 1939. It was 14.6% in 1940 and 9.9% in 1941. So much for the FDR ended the depression myth! And so much for deficit spending and absurdly low Fed controlled rates of interest.

Mr. Taibbi needs to do a little research to fill in the facts methinks.

Source: Bureau of Labor and Statistics

Amazing that so much water has flowed under the bridge since 1988. After all, it was only eight years after Keynes was air-brushed from western university economics textbooks after Reagan took power in 1980.

Yet I think it even more amazing that the nihilist Chicago school and their proxy, the (pseudo) Austrian school still carry on largely unchallenged, both in the closters of academia and out in the public domain. Not only in view of the gigantic scale of the crisis but also now that the causes have been laid bare for everyone to see.

Fortunately, Keynes was obviously not air-brushed from the Chinese universities, and the West’s doddering baby-boomer Keynesians have now come out of the woodwork (or retirement) to assist in saving the US and world economy.

But give a thought for the younger (indoctrinated) generations. What will happen when the old-timers have long been buried? Who in the generations after the baby-boomers will save e.g. the U.S in the next big recession after this?

I think it is surprising indeed that the Chicago school(s) whose acolytes not only caused untold damage by insisting on impossible terms for third-world countries applying for loans from the IMF but also caused the present crisis in the developed world, are sniping from the sidelines, instead of being taken out themselves.

Economics is for them just a tool, a pose, a way of clothing their naked Ayn Rand nihilism in pseudo-economic language. An academic who skulks in the academic closter and is not prepared to accept when he or she is wrong and change, has some other reason for maintaining a doctrinaire position.

All too often they harbour an evil ideology which runs deeper than true investigation, and which over-rides any knowledge they have. “You can take the boy out of the cult but you can’t take the cult out of the boy” is probably the real explanation here.

I am still waiting to see malfeasance trials of all those – who at every stage of the process – engaged in the criminal practices of fraud and deception when mortgages were mis-sold to sub-prime borrowers and sliced and diced and repackaged and and sold on.

A clean break with the past is necessary for any society after such a hiatus, or the rot will just continue to spread unaddressed in another form. Indictment should go right to the top, to the ones with the evil ideas. They should be punished hardest, for they had the knowledge, schooling and training but over-rode them, either for ideological reasons, a total lack of business ethics, or sheer unadulterated greed, or any combination of these three.

At Nurnberg after the Second World War the Allies tried not only the nazi henchmen, but the top Nazis whose ideas and status and power caused and co-ordinated the war and genocide.