The Sermon On The Mount[ain Of Debt]

‘Blessed are the young, for they shall inherit the national debt.’ – President Herbert Hoover
The Hoover administration thought there was no room and was ideologically opposed to fiscal expansion to stimulate aggregate demand. Furthermore, Keynesian theory was not even developed at the time. The General Theory of Employment, Interest and Money was not published until February 1936.
A policy error, partially due out of ignorance, that led to the Great Depression, though it was monetary policy and the Fed’s failure as ‘lender of last resort’ that ‘put the Great in the Great Depression.’
…what happened is that [the Federal Reserve] followed policies which led to a decline in the quantity of money by a third. For every $100 in paper money, in deposits, in cash, in currency, in existence in 1929, by the time you got to 1933 there was only about $65, $66 left. And that extraordinary collapse in the banking system, with about a third of the banks failing from beginning to end, with millions of people having their savings essentially washed out, that decline was utterly unnecessary – Milton Friedman

This post was published at Zero Hedge on Sep 23, 2017.