Populist efforts for bimetallism and the deflationary pressures of the late 19th century.
The book's most famous section, Chapter 7 (often published separately as The Great Contraction ), reinterpreted the Great Depression.
In the long run, the growth of the money supply primarily affects the price level (inflation), while in the short run, it can lead to changes in real output. A Monetary History of the United States, 1867-1960
The authors argued that the Depression was not a "market failure" but a "government failure." They blamed the Federal Reserve for allowing the money supply to shrink by one-third between 1929 and 1933.
Changes in the money supply profoundly influence the economy's behavior, including fluctuations in income and prices. The authors argued that the Depression was not
Before this book, the prevailing Keynesian consensus held that monetary policy was largely ineffective, especially during deep downturns. Friedman and Schwartz challenged this by demonstrating that:
They identified four critical errors, including raising interest rates in 1931 to defend the gold standard and failing to act as a "lender of last resort" to stop banking panics. Friedman and Schwartz challenged this by demonstrating that:
The book contends that had the Fed maintained a steady money supply, the severe contraction could have been avoided or significantly mitigated. Key Historical Episodes Analyzed The book covers several distinct monetary eras: