Last month, I met up with David Cowen, CEO of the Museum of American Finance in New York, for a tour and chat about financial history.

In this clip, Cowen discusses monetary policy during the Great Depression, and what current Federal Reserve Chairman Ben Bernanke learned from it. Have a look. (A transcript follows.)


David Cowen: Well this is something that's very interesting, because it's called Depression-Era Scrip, and most Americans don't realize that President Roosevelt, during the Depression, closed the banking system for a hundred days. A result of that was there was no money supply in circulation and individual municipalities therefore had to issue their own scrip.

Why is this germane today? We all know Ben Bernanke, the head of the Federal Reserve, is a student of the Depression, and he knows all about this problem, that there was no money in circulation. And so I have a suspicion that that's why he's doing QE1, QE2, and they'll keep going to QE25 -- or Twist 1, Twist 2 all the way to Twist 25, or Bond Buyback 1, Bond Buyback 2, etc., because he knows the flip side of that coin is disastrous in what we had to go through during the Depression.

More from The Motley Fool
The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock it is in the brand-new free report: "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.

The article What Bernanke Knows About the Great Depression originally appeared on Fool.com.

Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.


Increase your money and finance knowledge from home

Investor’s Toolbox

Improve your investing savvy with the right financial toolset.

View Course »

Basics of Diversification

Learn one of the fundamental concepts of building a portfolio.

View Course »

Add a Comment

*0 / 3000 Character Maximum