“Fed Chairman Bernanke believes in the Monetary Theory of the Great Depression, which holds that the Federal Reserve could have prevented the Great Depression by stopping the US money supply from contracting during the early 1930s. This is important because the Fed’s policy response to the current economic crisis – printing money and using it to buy financial asset from banks – was adopted because of Bernanke’s faith in this idea. The Monetary Theory of the Great Depression is incorrect, however. Consequently, the Fed’s Quantitative Easing policy is more likely to exacerbate than resolve the global crisis.” Read more.
Why Chairman Bernanke Is Wrong (Part One)
The Daily Reckoning, January 16, 2011.
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