Historical Lessons of the Responses to Pops
[L]iquidate labor, liquidate stocks, liquidate farmers, liquidate real estate … [a panic] will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people.
—Andrew Mellon, quoted in Herbert Hoover, Memoirs
AMERICAN HISTORY SUGGESTS four common characteristics of government responses to pops:
1. Legislative responses to financial crises and economic downturns have generally been limited and delayed.
2. The response often awaits a transition in political power. This partisan delay reflects the idea that the cause of the crisis ...