Before people get too deeply into trying to decide which is the two  
versions is correct, they should check the stats for 1930-33 and then  
specify precisely what is meant by "tight monetary policy" for this  
period.  I  do not have sources at hand just at the moment but remember  
that "excess reserves" and "high powered money" (depending on your  
preferred way of looking at things) rose.  In F&S's MONETARY HISTORY what  
makes monetary policy "tight" over this period is inadequate reserves  
given (an important word here) a shift in bank attitudes toward the  
Depost/reserve ratio and bank customer attitudes toward the  
Deposit/currency ratio.  To blame "tight monetary policy" for the  
disaster is, therefore, slightly peculiar. 
 
Anne Mayhew 
1101 McClung Tower 
University of Tennessee 
Knoxville, TN 37996-0411 
PH: 615-974-1689; FAX: 615-974-3915; E-MAIL: [log in to unmask] 
 
On Tue, 5 Dec 1995, Doepp James wrote: 
 
>  
>  
> On Sat, 2 Dec 1995, Brad De Long wrote: 
>  
> > >an 'invasion'). 
> >  
> > Hmmm... 
> >  
> > Milton Friedman said (roughly) that it was obvious that criminally 
inept 
> > government policy--and not the malfunctioning of a near-laissez-faire 
> > economic system--caused the Great Depression: monetary policy was much, 
> > much too tight over 1930-1933; nothing happening before 1930 made a 
> > _Great_Depression_ inevitable. 
> >  
> > Friedrich von Hayek said (roughly) that it was obvious that criminally 
> > inept government policy--and not the malfunctioning of a 
near-laissez-faire 
> > economic system--caused the Great Depression: monetary policy was much, 
> > much too loose over 1925-1929; nothing happening after 1929 could have 
> > avoided a _Great_Depression_. 
> >  
> >  
>  
> Couldn't they *both* be right?  Ie. first an overly loose monetary  
> policy (and misinvestment), followed by an overly tight one (and credit  
> crunch)? 
>  
>  
>  
>  
> !%!%!%!%!%!%!%!%!%!%!%!%!%!%!%!%!%!%!%!%!%!%!%!%!%! 
>  
> James D. Doepp 
> University of Miskolc (Hungary) 
> Department of Economic Theory 
>  
>  
>  
> "Mr Turnbull had predicted evil consequences,... 
> and was now doing the best in his power to bring 
> about the verification of his own prophecies." 
>  
> A. Trollope 
>  
> !%!%!%!%!%!%!%!%!%!%!%!%!%!%!%!%!%!%!%!%!%!%!%!%!%! 
>