Inside America's Worst Financial Crisis: Gold, the Real Bills Doctrine, and the Fed

Amanda GriffithsThe Cato Institute's newest book,Gold, the Real Bills Doctrine, and the Fed: Sources of Monetary Disorder, 1922 –1938 is out now — and it's already getting rave reviews for challenging conventional wisdom on the Great Depression.InGold, the Real Bills Doctrine, and the Fed,preeminent monetary historians Thomas M. Humphrey andRichard H. Timberlake deliver a compelling critique of the U.S. central bank ’s once-central theory on monetary policy: the Real Bills Doctrine. Theirs is the first full-length treatise on the doctrine and its formative role in the Great Depression and other monetary disorders of the early 20thcentury.Even today, the gold standard remains one of the most popular scapegoats for "the Great Contraction" — the unprecedented collapse of the U.S. money supply, which began after the 1929 stock market crash and led to the Great Depression. Skeptical of this hypothesis,Gold, the Real Bills Doctrine, and the Fedtraces the Contraction and the Depression — along with similar monetary crises like the German hyperinflation — to their true source: the Real Bills Doctrine. By drawing a false dichotomy between “productive activity” and “speculative activity,” Humphrey and Timberlake argue, the Doctrine wrongfully impugned speculation as the s ource of asset price bubbles and financial panic. Such flawed premises made the Fed unduly reluctant to make full use of the United States' ample gold reserves.Gold, the Real Bills Doctrine, and th...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs