Review of "The Bubble that Broke the World" by Garet Garrett

This book is a understandable history of inter-war finance (from an Austrian). I guess it’s a nice follow-up to some of Professor Rothbard’s writing, but if you have some knowledge of finance and have read Rothbard, I’m not sure you’ll get much from this book.

The book was written before WWII, but it feels as if it was written after, as it almost anticipates the war – an impressive feat. It also places the blame for the Depression (and the war?) on a credit (i.e. fiat currency) bubble. The book is a concise summary of an important financial era, and is very well written. It’s thesis seems a bit over-simplified (like a lot of the Austrian works I read) but it’s predictions are eerily accurate in hindsight (again like many of the Austrian works I read).

A good read, but probably not worth reading if you know financial history and have read Rothbard.

Update: I’d like to add some thoughts. Mr Garrett is very good at drawing out the relationships between international credit and war. He’s correct to point out that tons of credit is required for war. I agree that credit in massive amounts, and therefore a fiat currency is a necessary condition for large wars. Mr Garrett hints at going a step further in saying that with all the consequent interrelationships caused by the international credit boom, war became inevitable. I don’t know if I agree yet, but I’ll certainly be thinking about it.


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