"The slowdown in economic activity, together with high interest rates, was in all likelihood
the most important source of the stock market crash that followed in October.
In other words, the market crash, rather than being the cause of the Depression,
as popular legend has it, was in fact largely the result of an economic slowdown and
Of course, the stock market crash only worsened the economic situation,
hurting consumer and business confidence and contributing to a still deeper downturn in 1930."
Money, Gold, and the Great Depression.
At the H. Parker Willis Lecture in Economic Policy,
Washington and Lee University, Lexington, Virginia.
2nd March 2004
"Each of the policy options I have discussed so far involves the Fed's acting on its own.
In practice, the effectiveness of anti-deflation policy could be significantly enhanced by
cooperation between the monetary and fiscal authorities.
A broad-based tax cut, for example, accommodated by a program of open-market purchases
to alleviate any tendency for interest rates to increase, would almost certainly be
an effective stimulant to consumption and hence to prices.
Even if households decided not to increase consumption but instead re-balanced their portfolios
by using their extra cash to acquire real and financial assets,
the resulting increase in asset values would lower the cost of capital and
improve the balance sheet positions of potential borrowers.
A money-financed tax cut is essentially equivalent to
Milton Friedman's famous "helicopter drop" of money."
Governor Ben 'Systemic Risk' Bernanke
Deflation: Making Sure "It" Doesn't Happen Here.
Before the National Economists Club, Washington, D.C.
21st November 2002.
It is not equivalent to Milton Friedman's famous "helicopter drop" of money. In fat it is the exact opposite.
The necessary consequences of the monetary policy that was implemented after the crash is to decrease the marginal return on capital (long-term yields), create the Mother of the Bubbles and increase the price of minerals (Oil, Precious Metals, Base Metals...).
I have proved that Bernanke mismanaged the sub prime crisis: