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.
Today, the book is available in various formats, with Paperback editions and eBooks typically priced between $50 and $75.
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: A Monetary History of the United States, 1867-1960
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.
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. Key Historical Episodes Analyzed The book covers several
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:
Populist efforts for bimetallism and the deflationary pressures of the late 19th century. Friedman and Schwartz challenged this by demonstrating that:
The work served as the foundation for , emphasizing stable monetary rules over discretionary government management. It has had a lasting impact on central banking; former Fed Chairman Ben Bernanke famously conceded to the authors on behalf of the Federal Reserve: "You're right, we did it. We're very sorry. But thanks to you, we won't do it again".