What it if it just keeps going? That's the question Americans are asking as they consider last month's 9.1 percent unemployment rate, still so high 33 months after the crash of September 2008. Scholars of economic history are asking another question: Are we repeating 1937? That year, when Americans were expecting their economy to finally pull out of the Great Depression, the stock market dove again, with the Dow Jones Industrial Average dropping from the 190s in March 1937 to less than 100 in March 1938. Nonfarm private unemployment, the measure of Roosevelt's industrial economy, increased to more than 18 percent. Industrial production plunged by a third. The problem then was monetary, some economists now say. Paul Krugman, in his New York Times column on June 2, argued that monetary and fiscal tightening caused the 1937 downturn, and might be squeezing the breath out of the economy now, precluding job creation. Krugman cites Gauti B. Eggertsson of the New York Federal Reserve Bank, who recently published blog posts and papers noting that the later 1930s, as now, saw higher commodity prices. Officials considered these rising prices a signal of inflation, and pressed for tightening. They erred.
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