Looking at the various reactions to Ben Bernanke’s speech yesterday at Jackson Hole, with its hint that the Fed could consider QE3, but not yet, I was reminded of a fascinating memoir of the 1930s by Benjamin Roth. Roth was a lawyer in Youngstown, Ohio, and kept a diary about financial and economic events, recently republished as [amazon_link id=”158648799X” target=”_blank” ]The Great Depression: A Diary[/amazon_link]. What struck me when I first read it was the way the Depression dragged on and on, with numerous false dawns. As Roth noted in 1936: “When I started these notes, it never occurred to me that the depression would last more than two years. We are now in the beginning of the seventh year and the road is not yet clear – with the possibility of inflation ahead. We seem to be emerging form the panic, industry is picking up etc – but so much of it has been created by artificial spending that it is difficult to know where we stand.”

The long, long era of slow Japanese growth, and many other examples set out in that essential resource [amazon_link id=”0691152640″ target=”_blank” ]This Time Is Different[/amazon_link] by Reinhardt and Rogoff, underline the same point. It takes a long time for the economy to recover from a significant banking crisis.

[amazon_image id=”158648799X” link=”true” target=”_blank” size=”medium” ]Great Depression Diary[/amazon_image]