Insufficient powers of (European) central banks
Here is Ben Bernanke and Harold James (1991) on "Insufficient powers of (European) central banks": "An important institutional feature of the interwar gold standard is that, for a majority of the important continental European central banks, open market operations were not permitted or were severely restricted. This limitation on central bank powers was usually the result of the stabilization programs of the early and mid 1920s. By prohibiting central banks from holding or dealing in significant quantities of government securities, and thus making monetization of deficits more difficult, the architects of the stabilizations hoped to prevent future inflation. This forced the central banks to rely on discount policy (the terms at which they would make loans to commercial banks) as the principal means of affecting the domestic money supply. However, in a number of countries the major commercial banks borrowed very infrequently from the central banks, implying that except in crisis periods the central bank's control over the money supply might be quite weak." I wonder whether Ben Bernanke is having the same unpleasant feeling of déjà vu as I am having and what he plans to do about - because apparently nobody in Europe studied economic history.