There is a basic lesson on financial crises that governments tend to wait too long, underestimate the risks, want to do too little. And it ultimately gets away from them, and they end up spending more money, causing much more damage to the economy.
Interpretation
Governments often delay taking action during financial crises, leading to greater problems and costs later.
The quote highlights a critical pattern observed in governmental responses to financial crises, where officials tend to procrastinate and underestimate the severity of the situation. This hesitance to act decisively not only worsens the economic fallout but leads to higher costs in the long run, as more extensive interventions become necessary to mitigate the damage that has spiraled out of control.
In practice
In a discussion about economic policy, this quote could underscore the importance of timely government intervention.
One of the arguments I make for the failure of the euro is that, at the time it was being constructed, there was a 'neo-liberal' ideology which said that all we need to do to make this thing work is to get deficits low, keep inflation low, and take down barriers, and then everything would be fine.
The merchants will manage [commerce] the better, the more they are left free to manage for themselves.
After the 1929 crash, the Federal Reserve mistakenly focused its policies on preserving the gold value of the dollar rather than on stabilizing the domestic economy.
One way to measure the size of a company, industry, or economy is to determine its output. But a better way is to determine its added value - namely, the difference between the value of its outputs, that is, the goods and services it produces, and the costs of its inputs, such as the raw materials and energy it consumes.
An economy can survive with 10% of the population insolation. It can't survive when 50% of the population is in isolation.
Economics taught in most of the elite universities are practically useless in my context. My country is dominated by drug economy and a mafia. Textbook economics does not work in my context, and I have very few recommendations from anybody as to how to put together a legal economy.
Subscribe for the occasional hand-picked quote. No noise.