In this long discussion of AD and AS I've been hoping to see more on bank
expansion and contraction, but failing that, and failing great confidence in
myself to dispose of it definitively, let me raise it as a question for the
macro specialists. 

I wonder how much of this shortfall of AD after 1929 can be explained as
contraction of demand deposits? This in turn would have been triggered by
the fall of collateral values following the peak of about 1926-27, as
documented by, for example, Hoyt, Vanderblue, Fisher, Maverick, and others.
By the late 1920's, most demand deposits were secured by real estate
collateral, with loan terms much shorter than today, and values inflated by
previous deposit expansion, constructing the house of cards that was to
collapse. 

It would be useful to weave that matter into macro explanations, one would
think. Comments welcomed.

Mason Gaffney