There was an interesting article in The Economist a while ago about the recent economic crisis and the problems of using history analogies. Reporting on a lecture by Barry Eichengreen, economic historian, the article argues that the 2007-2009 has been judged to be the worst economic crisis since the Great Depression of the 1930s. The problem with using historical examples, however, is that there is rarely agreement about what history teaches us or, indeed, even about the facts themselves. The author cites examples such as the fear of 1930s style debt inflation that causes the central banks to cut rates whenever markets wobble, or the belief that World War II would resemble the defensive stalemate of World War I, which allowed the Allies to be pushed back. He concludes that historical analogies can be thought-provoking but that the parallels should not be taken too literally since history rarely repeats itself exactly.
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