“[T]he stated purpose of the Wall Street bailouts — to avoid a replay of the 1930s — was drastically misguided. It was based on a phantom threat which arose overwhelmingly from the faulty scholarship of a single official . . . who had come to head the nation’s central bank. The analysis was actually not even his own, but was the borrowed theory of Professor Milton Friedman.”
“Forty years earlier, Friedman had famously claimed that the Fed’s failure to run its printing presses full tilt during certain periods of 1930-1932 had caused the Great Depression. Bernanke’s sole contribution to this truly wrong-headed proposition was a few essays consisting mainly of dense math equations. They showed the undeniable correlation between the collapse of GDP and the money supply, but proved no causation whatsoever.”
“In fact . . . the great contraction of 1929-1933 was rooted in the bubble of debt and financial speculation that built up in the years before October 1929 . . . . the . . . central bank [is] now led by an academic zealot who had gotten cause and effect upside down.”
– David A. Stockman, The Great Deformation: The Corruption of Capitalism in America, pp. 42-43.
