In Defense of the Real Bills Doctrine
For over seventy years, the question of what caused the Great Depression in the United States (1929â€“1933) has been one of the most debated economic issues. Since Friedman and Schwartz (1963), the cause has prominently been attributed to monetary mismanagement by the Fed, which let the money stock contract and thus failed to act as a lender of last resort. Recently, some authors have seen this contraction as a necessary consequence of the gold standard, which â€œfetteredâ€ the Fedâ€™s hands making it unable to respond to increased currency demands (Bernanke 1993, Eichengreen 1992 and 2002, Temin 1989 and 1994, Wheelock 1992). In the previous issue of Econ Journal Watch, Richard Timberlake takes issue with this view. In my judgment, Timberlake successfully argues against â€œgolden fettersâ€ and exonerates the gold standard. But there is a secondary aspect of Timberlakesâ€™s article. Timberlake blames the Great Contraction on the Fedâ€™s adherence to the so-called Real Bills Doctrine.
Volume (Year): 3 (2006)
Issue (Month): 1 (January)
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- Michael D. Bordeo and Anna J. Schwartz, 1995. "The Performance and Stability of Banking Systems under "Self-Regulation": Theory and Evidence," Cato Journal, Cato Journal, Cato Institute, vol. 14(3), pages 453-479, Winter.
- Barry Eichengreen, 1992.
"Golden Fetters: The Gold Standard and the Great Depression, 1919-1939,"
National Bureau of Economic Research, Inc, number eich92-1, Enero.
- Eichengreen, Barry, 1996. "Golden Fetters: The Gold Standard and the Great Depression, 1919-1939," OUP Catalogue, Oxford University Press, number 9780195101133, December.
- Selgin, George A. & White, Lawrence H., 1994. "Monetary Reform and the Redemption of National Bank Notes, 1863–1913," Business History Review, Cambridge University Press, vol. 68(02), pages 205-243, June.
- David C. Wheelock, 1992. "Monetary policy in the Great Depression: what the Fed did and why," Review, Federal Reserve Bank of St. Louis, issue Mar, pages 3-28.
- Richard H. Timberlake, 2005. "Gold Standards and the Real Bills Doctrine in U.S. Monetary Policy," Econ Journal Watch, Econ Journal Watch, vol. 2(2), pages 196-233, August.
- Barry Eichengreen, 2002. "Still Fettered After All These Years," NBER Working Papers 9276, National Bureau of Economic Research, Inc.
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