Construction Boom and Bust Between the World Wars

FreemanVol. 58 Nbr. 5, June 2008

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Summary


Imagine a story about collapse of the real-estate markets that states: "Most of the millions piled up in paper profits had melted away, many of the millions sunk in developments had been sunk for good and all, the vast inverted pyramid of credit had toppled to earth, and the lesson of the economic falsity of a scheme of land values based upon grandiose plans, preposterous expectations, and hot air had been taught in a long agony of deflation." The Federal Reserve banks created such conditions, in part because their managers hoped that a "regime of cheap money," as British economist Lionel Robbins described it, would ease the way for Great Britain to resume convertibility of the pound sterling in 1925 at its pre-war value relative to the dollar.

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Construction Boom and Bust Between the World Wars

Imagine a story about collapse of the real-estate markets that states: "Most of the millions piled up in paper profits had melted away, many of the millions sunk in developments had been sunk for good and all, the vast inverted pyramid of credit had toppled to earth, and the lesson of the economic falsity of a scheme of land values based upon grandiose plans, prep...

See the full content of this document

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