A Monetary History of the United States, 1867-1960
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"A Monetary History of the United States, 1867-1960" is a seminal work in the field of economics authored by Milton Friedman and Anna J. Schwartz. First published in 1963, the book examines the monetary history of the United States from the 1860s to the early 1960s. It offers a comprehensive analysis of the role of money and monetary policy in shaping the country's economic history.
Role of Money: The book begins by emphasizing the importance of the money supply in understanding economic fluctuations. Friedman and Schwartz argue that changes in the money supply have a profound impact on economic activity, including inflation, deflation, recessions, and depressions.
Monetary Theory: The authors present their monetary theory, emphasizing that fluctuations in the money supply are a primary driver of changes in the overall price level. They assert that controlling the money supply is the most effective way to stabilize the economy.
Historical Analysis: The core of the book consists of an extensive historical analysis of the United States' monetary history. It covers various periods, including the Civil War, the Great Depression, and both World Wars, examining the monetary policies implemented during these times.
Gold Standard: The book explores the country's experience with the gold standard, detailing how it influenced monetary policy and economic stability. It discusses the tension between adhering to the gold standard and accommodating the needs of a growing economy.
Banking Panics: Friedman and Schwartz examine the role of banking panics in triggering and exacerbating economic crises. They argue that inadequately managed banking systems and panics contributed to economic downturns.
Federal Reserve: The authors discuss the establishment and evolution of the Federal Reserve System and its role in monetary policy. They analyze the Fed's actions during various crises and their impact on the money supply and the economy.
Empirical Analysis: The book relies heavily on empirical data to support its arguments. It presents statistical evidence and charts illustrating the relationship between money supply changes and economic performance.
Policy Recommendations: Friedman and Schwartz conclude the book by making policy recommendations based on their analysis. They advocate for a rules-based approach to monetary policy and argue that the central bank should maintain a stable money supply growth rate to promote economic stability.
Influence: "A Monetary History of the United States" has had a profound influence on the field of economics and the practice of monetary policy. It played a significant role in the development of the monetarist school of thought.
The book is widely regarded as a classic in the field of economics and remains an influential work in discussions about monetary policy, the role of central banks, and the relationship between money and economic performance. It offers valuable insights into the historical context of U.S. monetary policy and its implications for economic stability.
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