Thoughts on the Crisis of 1957

Abstract

One of the many troubles about our present financial difficulties is the complexity of the intellectual issues involved. To the superficial observer, at least, the crisis of last autumn blew up in a comparatively clear sky: how many professional prophets predicted anything like what actually happened? Moreover, even if, with wisdom after the event, we piece together the various influences immediately operative, how much agreement do we find concerning the longer-run tendencies operative? Was the inflation of the demand-pull or the cost-push variety? To what extent is the trouble to be attributed to the deficiencies of monetary policy as an instrument or is it true to say that the instrument had not been appropriately applied? These and such-like questions beset any attempt at diagnosis of the crisis.

A paper originally published in Lloyds Bank Review for April 1958.