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To: Joe Btfsplk who wrote (6894)	6/30/2008 7:26:18 PM
From: Ilaine	Read Replies (1) \| Respond to of 6901

I agree with you that Friedman and Schwartz accurately analyzed the monetary causes of the Great Depression in the US. Message 24712234 However, I would disagree that Keynes did not accurately predict the deflationary consequences of Great Britain's attempt to go back on the Gold Exchange Standard at pound/gold parity at the same level as it was at when they went off the Gold Exchange Standard for World War I. See, e.g., Keynes' "Economic Consequences of Mr. Churchill," Eichengreen's "Golden Fetters: The Gold Standard and the Great Depression," and Temin's "Lessons from the Great Depression." Friedman and Schwartz discuss this briefly in Chapter 6, as well. I am not suggesting that you should embrace Keynes' expansionary policies but consider the consequences of deliberately deflating the money supply, which was the inexorable consequence of Churchill's decision vis-a-vis the Gold Exchange Standard. I bow to no one in admiration of Mr. Churchill's monumental successes but he did also make colossal blunders. This may well have been his worst.