A Monetary History Of The United States, 1867-1960 99%

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. 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. Before this book, the prevailing Keynesian consensus held

The transition from private clearinghouses to a centralized monetary authority. The transition from private clearinghouses to a centralized

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.