I know of no severe depression, in any country or any time, that was not accompanied by a sharp decline in the stock of money and equally of no sharp decline in the stock of money that was not accompanied by a severe depression.
About this quote
- What does it mean?
- Severe depressions always coincide with sharp drops in the money supply.
- In plain terms
- When money supply drops, the economy usually suffers deeply.
- What can you take from it?
- Money supply changes signal economic trouble.
Where it applies
Putting it to work
Questions to consider
- Is money supply the cause or effect?
- What else changes?
Another view
Correlation does not always prove causation.
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