The only thing we learn from history is that we don't learn from history

History can be a fantastic guide for the future, and it seems to work pretty well when it comes to macroeconomic policy. But why doesn't the government, especially the "independent" Federal Reserve, learn from its mistakes? Right now they are continuing to "prime the pump" with liquidity to stave off recession. As you can see by this quote from an article by historian/economist Thomas DiLorenzo, the government tried the same thing during the Great Depression to no avail.

"But as Murray Rothbard showed in America’s Great Depression, it was the easy money policies of the early and mid-1920s that created all the malinvestment that was the trigger for the Great Depression. The only wise thing to have done was to allow the liquidation of hundreds of overcapitalized businesses to occur. Instead, the Fed increased the monetary base by 100 percent in five years, causing more of the same overcapitalization problems that were the source of the problem in the first place."

Isn't it the definition of insanity when you do the same thing over and over again and keep getting the same results, but expecting different results?

The article by DiLorenzo appeared in The Free Market, a publication of The Mises Institute, November, 2004. Full article here.