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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: bart13 who wrote (101255)	2/13/2009 3:06:37 PM
From: Elroy Jetson	2 Recommendations Read Replies (2) \| Respond to of 110194

I'm quite correct in reporting the money supply increasing leading into the Great Depression as Friedman and Schwartz point out. They merely highlight a decline once monetary velocity is taken into consideration. Their suggested amelioration would have required an explosive growth in debt. Friedman-mania is a recognized mental disorder. The causes of the Great Depression began in the plunge in demand at the end of WW-I. The rapid growth of credit engineered by central banks was designed to counteract this decline with monetary inflation. This eventually failed. As Joseph Schumpeter summarized, "Policy does not allow a choice between depression or no depression, but between depression now or a worse depression later. Inflation pushed far enough would undoubtedly turn depression into the sham prosperity so familiar from European postwar (WW-I) experience, and would, in the end, lead to a collapse worse than the one it was called in to remedy. For recovery is sound only if it does come of itself. For any revival which is merely due to artificial stimulus leaves part of the work of depressions undone and adds, to an undigested remnant of maladjustment, new maladjustment of its own which has to be liquidated in turn, thus threatening business with another worse crisis ahead."