The Federal Reserve definitely caused the Great Depression by contracting the amount of money in circulation by one-third from 1929 to 1933
About this quote
- What does it mean?
- Friedman attributes the Great Depression primarily to the Federal Reserve's contraction of the money supply.
- In plain terms
- The Federal Reserve made the Great Depression worse by reducing the amount of money available.
- What can you take from it?
- Monetary policy mistakes can cause major economic downturns.
Where it applies
Putting it to work
Questions to consider
- How much did policy cause the crisis?
- What else mattered?
Another view
Other factors beyond monetary contraction also contributed to the Depression.
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