Gary North on current economic affairs and investment marketsGary North -- Specific Answers
HomeContact MeTell a FriendText SizeSearchMember Area
Gain immediate access to all of our current articles, the question-and-answer forums, dozens of free books, and article archives. Click here for details on how to join.

About This Site
Academic Gaps
Articles
Capitalism and the Bible
Clichés of Protectionism
College Finances
Debt Management
Ellen Brown: Critique
Federal Reserve Charts
Gary North's Free Books
Get Published Here!
Gold Price & My Report
Keynes Project
Price Index (U.S.A.)
Questions for Jim Wallis
Remnant Review
Social Security/Medicare
Sustained Revival
Tea Party Economist
U.S. Debt Clock
Yield Curve
Your YouTube Channel
Gary North's Miscellany
Advertising
Blogging
Budgeting for Wealth
Business Start-Up
Career Advancement
Digital Tools
Education That Works
Evernote: Free Notes
Federal Reserve Policy
Fireproof Your Job
Goal-Setting for Success
Great Default
Inheritance Strategies
Insurance
International Investing
Investment Basics
Job and Calling
Keynesian Economics
Leadership
Marketing Case Studies
Obamanomics
Precious Metals
Real Estate
Retirement
Safe Places
State of the Economy
Stocks and Bonds
Video Channel Profits
War With Iran
Members' Free Manuals
Our Products
Contact Me
Help
Tell a Friend
Text Size
Your Account
My 100% Guarantee
Privacy Policy
Terms of Use


This site powered by MemberGate

Historical Error #26: A Bogus Quotation from Milton Friedman on the Federal Reserve Deliberately Causing the Great Depression

Gary North
Printer-Friendly Format

Ellen Brown argues that Benjamin Strong, who died in 1929, in 1929 conspired with the head of the Bank of England to cause the stock market crash of 1929. To help prove her point, she offers this quotation.

Who was to blame for this decade-long cyclone of debt and devastation? Milton Friedman, professor of economics at the University of Chicago and winner of a Nobel Prize in economics, stated:

The Federal Reserve definitely caused the Great Depression by contracting the amount of currency in circulation by one-third from 1929 to 1933. [Web of Debt, p. 146]

She offers no footnote.

Milton Friedman established his reputation with a co-authored book, A Monetary History of the United States (1963). In that book, and in articles after, he argued that the Federal Reserve did not take strong action to counter the effects of monetary contraction being caused by the bankruptcy of 9,000 banks. He believed that the decision-makers at the FED did not understand what they were facing. But he never said that the Federal Reserve deliberately caused the Great Depression.

When I searched for the source of this quotation, I found it all over the Web. Its source was supposedly a January 1996 interview on National Public Radio. This is a yellow flag for a bogus quotation. First, no day is listed. Second, no show is listed. Third -- and most important -- no verbatim transcript of the interview is cited: exact page number.

It is easy to forget what someone said. The person who was interviewed can't even be sure. So, for a direct quotation to be validated, there has to be either an official written transcript or else an audio file of the interview. In this case, there is not even a reference to the show.

Here is an interview that he gave to PBS in 2000. There is a transcript.

At all times, the Federal Reserve had the power and the knowledge to have stopped that. And there were people at the time who were all the time urging them to do that. So it was, in my opinion, clearly a mistake of policy that led to the Great Depression.

On the previous page of Web of Debt, we read about the Federal Deposit Insurance Corporation (FDIC), which was set up in 1934. She argues that it was set up to protect bankers. She does not mention this crucial fact: After the FDIC went into operation, bank failures ceased, the money supply rose dramatically, and the Great Depression still did not go away.

You can see the evidence here. Look at the chart. The FED did not shrink the monetary base in 1930-31. It kept it flat. The FED increased it in 1932. In 1933, it rose even faster. The money supply fell, 1929-33, because of bankrupted banks. This ended in 1934, because of the FDIC. The money supply then rose. This chart is from an article by the Vice President of the Federal Reserve Bank of St. Louis.



Yet on page 151, she writes: "In the Great Depression, labor again rusted into nonproductivity, due to a lack of available money to oil the wheels of production." Give me a break! Look at the chart!

For my reply to her response, click here:

http://www.garynorth.com/public/7242.cfm

For a detailed critique of Ellen Brown's economics, go here:

http://www.garynorth.com/public/department141.cfm


Printer-Friendly Format
 Tip of the Week
Sign up for my free
Tip of the Week
Verification Characters:    Type     I  2  N  F  5     here   


Tip of the week archives
On what this icon
means, and how it
can help you,
click here
 Q & A Forums
General Q&A Forum
Advertising and Resumés
Affiliates
American History Topics
Backyard Food Gardening
Banking and Politics
Blog Sites and Web Sites
Books Worth Reading
Bumper Sticker Slogans
Business Forum
Buying Smart
Christian Service Forum
College -- The Cheap Way
Copywriting
Education Alternatives
Food Storage
For Women Only
Fukushima
GNC Benefits
GNC Testimonials
Gold and Silver
Great Default Forum
Health and Diet
Health Insurance
Homeschooling
Investments Forum
Iran War
Job, Calling, and Career
Leadership Development
Legacy Building
Less Dependent Living
Local Political Action
Non-Retirement Forum
One Good Idea
Police State
Privacy
Public Speaking
Real Estate Forum
Remnant Review Forum
Safe Places Forum
Taxation Policy
Typographical Errors
Video Production Basics

 Archives
Reality Check
 Discussion Forum
Search Discussion


Recent Forum Posts
• Technical Analysis
• Blood Moons Tetrad
• 60 mins piece, stock market rigged! Why Invest.
• 60 mins piece, stock market rigged! Why Invest.
• Sean Hyman Absolute profits secret calendar
• Investment Portfolio - Inverse Funds
• DowJones Ind Avg is a hoax
• Digital textbooks
• Joint Venture Oil & Gas Investing
• Trading Or Gambling?
• 5 year return on investment in Stock Market
• Bottom for Mining Stocks?
• Home Equity Loan for investment
• 770 accounts, has anyone heard of them?
• 401K-- cash-out or roll-over?
• proposed elimination of 1031 exchange
• Business card for real estate
• Buy rentals in NW Indiana
• Market and Timing
• Housing Advice Sought...
• Too many Eggs in one basket???
• edit
• Sit On Two Mortgages?
• Motivated sellers
• Recommendations for Pre-Approval for Mortgage?
• Rental properties in hurricane country
• Rental Property in Houston - Harris Ctny Appraisal
• Weighing Options on Potential Rental Property
• Seeking Counsel - When and Where to Buy
• Taking Title Subject to Existing Lien
• Middle Class squeezed out of Chicago
• An Article on Chile
• 5 Amazing, Cheap Places to Live as an Expat
• Oil Field Job Security
• Moving to TriCities Area
• PJ ORourke on the Baby Boom
• Is Vegas DOOMED?
• Mint.com
• Second Passport- Mexico?
• Radiation dangers to US,World Confirmed
• Safety in numbers? Questions…..
• Best in Asia?
• Simple Exercise
• Coming to an airport near you ...
• S.W. New Mexico not looking so safe...
• I take it Retirement Armageddon is not available
• Post Retirement Career
• Social Security - when to start collecting
• 401K Risk
• Detroit Retirees Fight 83% Health Care Cut
• Lump Sum Early DROP
• Underfunded pensions
• 401k strategy
• Can I Avoid Medicare Entirely?
• Looking for a Financial Planner/CPA
• How to calculate retirement needs
• Two IRA questions:
• Rentals
• Why?
• Teaching in non-retirement
• The Fed is no devil?
• Have You Noticed This In Your Grocery Store
• A few laughs from SW Airlines
• Interesting website
• Fruit of the Christian Reconstruction Movement
• How much do you get on section 8 --$2274 month
• Multi-tasking
• Indexing
• Recession 2017-2020?
• Too Good To Be True?
• Peter Schiff Extols Advantages of Puerto Rico
• Money with Christian Court TV?
• Fresh produce: economic reasoning
• Pareto Improvement Theory
• Fallback Plan Start
• Intern to Equity Holder
• Oil field business ideas?
• Turning Over Tables on Craigslist
• This might be crazy. Maybe not. I don't know.
• Best Ways of Starting an Online Business
• Copyright Law for Textbook Problems
• Help Needed with Music Appreciation Course
• Engineer starts rubber band braclet business
• Is my USP unappealing?
• Startup of a Daycare
• Last payment
• Employee Death
• Start a busines for free: Denny Hatch
• Dick Cabela's Legacy: Obsess on the Customer
• Starting small business help