Warren G. Harding and the depression of 1920-21

I've been doing some research for a pending post on how Roosevelt used the CCC during the Great Depression; today I ran across an article from The American Conservative describing how President Harding's administration addressed their recession. Stong disclaimer: I know NOTHING about Warren G. Harding or the depression of 1920-21. What I find interesting about the article (excerpted below) is how diametrically opposite Harding's approach was to the approach started by the Bush administration and being continued by the Obama administration...

...the depression of 1920-21, which most people have never heard of, is an example of the resumption of prosperity in the absence of government stimulus, indeed in the face of its very opposite...

During and after World War I, the Federal Reserve inflated the money supply substantially. Once the Fed finally began to raise the discount rate—the rate at which it lends to banks—the economy slowed as it started readjusting to reality... Harding elsewhere explained that wages, like prices, would need to come down to reflect post-bubble economic realities...

“Gross expansion of currency and credit have depreciated the dollar just as expansion and inflation have discredited the coins of the world. We inflated in haste, we must deflate in deliberation. We debased the dollar in reckless finance, we must restore in honesty.”

"All the penalties will not be light, nor evenly distributed. There is no way of making them so. There is no instant step from disorder to order. We must face a condition of grim reality, charge off our losses and start afresh. It is the oldest lesson of civilization."

Harding was true to his word, carrying on budget cuts that had begun under a debilitated Woodrow Wilson. Federal spending declined from $6.3 billion in 1920 to $5 billion in 1921 and $3.3 billion in 1922. Tax rates, meanwhile, were slashed—for every income group. And over the course of the 1920s, the national debt was reduced by one third...

The problem is not with an inadequate level of spending, but that in the wake of a central bank-induced boom, the capital structure is out of conformity with consumer demand. The recession is the period in which this mismatch is rectified through the reallocation of capital into more appropriate channels. Fiscal and monetary stimulus only interferes with and delays this purgative process.

I'm not taking a postion on this right now, because I have no expertise in macroeconomics, though I have often expressed in this blog my preference for smaller government and fiscal responsibility; I'm just not sure what interventions might be mandated by the egregious extent of the current economic crisis and the structural weaknesses that underlie it. I'm afraid the comment thread for this will quickly devolve into the Bush-haters vs. the Obama-haters pushing their political biases forward and striving to assign blame; I'd rather see a more informative discussion of economic theories. Still I wanted to post this, if for no other reason than to use it for referral for future posts.