Although painful, the solution to the 2020 economic recession is simple—uncover our problems, let prices adjust, and reallocate capital toward productive usages.

The quicker we adjust, the shorter the recession and the sooner we create a sustainable economic foundation for future prosperity. This approach is the polar opposite to the current interventionist and inflationist orthodoxy. Murray Rothbard’s America’s Great Depression highlights the folly of government intervention during the 1930s and the economic malaise followed. The similarities to today are a warning sign. It’s time to push back against the stimulatory and interventionist status quo or prepare for the recession to turn into a depression.

The “Roaring 20s” in the lead-up to the 1929 equity market crash that started the Great Depression were characterized by numerous factors that were also seen in the decade leading up to 2020. My top three: 1) Soft Consumer Price Index (CPI) inflation encouraged significant monetary inflation by the Fed. US money supply grew approximately 60 percent between 1921 and 1929, and an astounding 145 percent between 2009 and 2019. Economists were myopically focused on CPI inflation without appreciating broader inflation, particularly in asset prices. 2) Rampant equity prices appreciated the monetary inflation—the S&P500 gained 700 percent between 1921 and 1929 and 480 percent between 2009 and 2019. 3) Powerful global central bankers had close political allegiances and were overconfident in their ability to micromanage monetary imbalances.

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