Money in the Great Recession: Did a Crash in Money Growth Cause the Global Slump? (Buckingham Studies in Money, Banking and Central Banking)

No issue is more fundamental in contemporary macroeconomics than identifying the causes of the recent Great Recession. The standard view is that the banks were to blame because they took on too much risk, 'went bust' and had to be bailed out by governments. However very few banks actually had losses in excess of their capital. The counter-argument presented in this stimulating new book is that the Great Recession was in fact caused by a collapse in the rate of change of the quantity of money. This was the result of a mistimed and inappropriate tightening of banks' capital regulations, which had vicious deflationary consequences at just the wrong point in the business cycle. Central bankers and financial regulators made serious mistakes. The book's argument echoes that on the causes of the Great Depression made by Milton Friedman and Anna Schwartz in their classic book __A Monetary History of the United States.__ Offering an alternative monetary explanation of the Great Recession, this book is essential reading for all economists working in macroeconomics and monetary economics. It will also appeal to those interested in the wider public policy debates arising from the crisis and its aftermath. **Contributors include:** P. Booth, J.E. Castañeda, T. Congdon, C. Goodhart, S. Hanke, D. Laidler, A. Ridley, R. Skidelsky, R. Thomas No issue is more fundamental in contemporary macroeconomics than identifying the causes of the recent Great Recession. The standard view is that the banks were to blame because they took on too much risk, 'went bust' and had to be bailed out by governments. However very few banks actually had losses in excess of their capital. The counter-argument presented in this stimulating new book is that the Great Recession was in fact caused by a collapse in the rate of change of the quantity of money. This was the result of a mistimed and inappropriate tightening of banks' capital regulations, which had vicious deflationary consequences at just the wrong point in the business cycle. Central bankers and financial regulators made serious mistakes. The book's argument echoes that on the causes of the Great Depression made by Milton Friedman and Anna Schwartz in their classic book A Monetary History of the United States. Offering an alternative monetary explanation of the Great Recession, this book is essential reading for all economists working in macroeconomics and monetary economics. It will also appeal to those interested in the wider public policy debates arising from the crisis and its aftermath. No issue is more fundamental in contemporary macroeconomics than identifying the causes of the recent Great Recession. The standard view is that the banks were to blame because they took on too much risk, 'went bust' and had to be bailed out by governments. However very few banks actually had losses in excess of their capital. The counter-argument presented in this stimulating new book is that the Great Recession was in fact caused by a collapse in the rate of change of the quantity of money. This was the result of a mistimed and inappropriate tightening of banks' capital regulations, which had vicious deflationary consequences at just the wrong point in the business cycle. Central bankers and financial regulators made serious mistakes. The book's argument echoes that on the causes of the Great Depression made by Milton Friedman and Anna Schwartz in their classic book A Monetary History of the United States. Offering an alternative monetary explanation of the Great Recession, this book is essential reading for all economists working in macroeconomics and monetary economics. It will also appeal to those interested in the wider public policy debates arising from the crisis and its aftermath Contents 5 Contributors 7 Foreword 9 Introduction: the quantity theory of money – why another restatement is needed, and why it matters to the debates on the Great R 11 PART 1 What Were the Causes of the Great Recession? 31 Introduction to Part I 33 1. What were the causes of the Great Recession? The mainstream approach vs. the monetary interpretation* 37 2. The debate over “quantitative easing” in the UK’s Great Recession and afterwards 67 3. UK broad money growth and nominal spending during the Great Recession: an analysis of the money creation process and the role 88 4. Have central banks forgotten about money? The case of the European Central Bank, 1999–2014 111 PART 2 The Financial System in the Great Recession: Culprit or Victim? 141 Introduction to Part II 143 5. The impact of the New Regulatory Wisdom on banking, credit and money: good or bad? 147 6. Why has monetary policy not worked as expected? Some interactions between financial regulation, credit and money 165 7. The Basel rules and the banking system: an American perspective* 174 PART 3 How Should the Great Recession be Viewed in Monetary Thought and History? 189 Introduction to Part III 191 8. Monetary policy, asset prices and financial institutions* 195 9. How would Keynes have analysed the Great Recession of 2008 and 2009? 218 10. Why Friedman and Schwartz’s interpretation of the Great Depression still matters: reassessing the thesis of their 1963 Monet 243 Index 269 La 4e de couverture indique : "No issue is more fundamental in contemporary macroeconomics than identifying the causes of the recent Great Recession. The standard view is that the banks were to blame because they took on too much risk, 'went bust' and had to be bailed out by governments. However very few banks actually had losses in excess of their capital. The counter-argument presented in this stimulating new book is that the Great Recession was in fact caused by a collapse in the rate of change of the quantity of money. This was the result of a mistimed and inappropriate tightening of banks' capital regulations, which had vicious deflationary consequences at just the wrong point in the business cycle. Central bankers and financial regulators made serious mistakes. The book's argument echoes that on the causes of the Great Depression made by Milton Friedman and Anna Schwartz in their classic book A Monetary History of the United States. Offering an alternative monetary explanation of the Great Recession, this book is essential reading for all economists working in macroeconomics and monetary economics. It will also appeal to those interested in the wider public policy debates arising from the crisis and its aftermath."