It seems pretty easy to avoid "liquidationism," Roger. Indeed, I 
thought that you pointed out that Currie (and perhaps the old Chicago 
school) had the answer. The answer: Completely separate the 
depository function from the financial intermediation function by 
insisting on 100% reserves for depository institutions. If depository 
institutions cannot create money, they also cannot destroy it. Isn't 
that right?

One does not need Keynes to tell us this, does one? On the contrary, 
it might not be too far-fetched to peruse that the reason why a 100% 
reserve depository system seems so strange today is that the 
Keynesian-oriented economics textbooks during the 50s and 60s, and 
each of the 'ties since, became fixated on teaching the fractional 
reserves system, regulated by the FED, as if it was the final 
solution to the monetary problems that are likely to occur during 
business cycles, including those of the Great Depression. (Of course, 
if it was the final solution, the FED in the US would not today be 
experimenting with the "term auction facility" in an effort to get 
banks to create more money.) A government can only avoid a business 
cycles, the Keynesian-oriented macro textbooks taught us, by insuring 
transferable deposits within the context of the fractional reserve 
system. The question of why this solution assumed a fractional 
reserve system was....assumed away?

"Why then is the world in a recession?" Because...

two separable and distinct functions -- deposit services and 
financial intermediation -- have been combined in our laws and in our 
economics textbooks, not to mention in the articles of writers who refer to MV.

Why, one should ask you, do you not believe that Currie taught the 
"right" lessons? What are the lessons one can glean from Keynes, 
Hawtrey and Hume on this issue?

Pat Gunning