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 > > !%!%!%!%!%!%!%!%!%!%!%!%!%!%!%!%!%!%!%!%!%!%!%!%!%! >