Panics and Booms, a lesson from 1897

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'Written in 1897, entitled “Panics and Booms” by L.M. Holt. When Holt wrote the paper, the economy was at the tail end of a depression that had begun in 1892. Holt argued that booms always follow busts, so folks should anticipate the return of flush times. Fast-forward five years, a new boom was in full swing, and the newspaper republished Holt’s paper as a warning that the next depression was due around 1910, give or take. The Bank Panic of 1907 arrived a bit ahead of schedule.

It’s a great read, particularly now when most observers remain conflicted about what kind of economic funk we’re in. Mr. Holt described quite clearly the economic conditions we face today, a depression created by over-indebtedness. And he offers a prescription for how to dig ourselves out: pay back debt. It’s a prescription I endorse wholeheartedly.

Another reason it’s worthy of full reproduction: Irving Fisher generally gets credit for having created the “debt deflation theory of depressions.” Holt beat him to it by 36 years. Enjoy! '


http://optionarmageddon.ml-implode.com/2009/03/11/panics-and-booms-1897/