“[T]he rulers of the exchange of mankind’s goods have failed, through their own stubbornness and their own incompetence, have admitted their failure, and abdicated. Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men. True they have tried, but their efforts have been cast in the pattern of an outworn tradition. Faced by failure of credit they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence.”
- Franklin Delano Roosevelt, March 4, 1933

Unfortunately, now that the financial authorities are again facing a failure of credit, as evidenced by the 8.3 percent decline in commercial bank loans and leases since October 2008, the political authorities are following FDR’s lead in attempting to utilize fiscal policy to compensate for the failure of credit and monetary policy. This strategy is no more likely to be successful now than it was then.