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DeLong Smackdown Watch: Monetary Policy Milton Friedman, and the Great Depression: Monday Hoisted from Comments Weblogging

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Robert Waldmann asks a question:

Brad DeLong : Noted for March 17, 2013: In the linked review you agree with Friedman (and Bernanke at the time) that loose monetery policy could have prevented the great depression from being great. We now have new evidence. Bernanke et al did what Friedman told them to do. Indeed the great recession wasn't a depression or the lesser depression wasn't great. But it seems clear to me that the past 5 years show that Friedman was fundamentally wrong. GDP can tank while m2 is growing more quickly than usual. Do you agree that the view you expressed in your review has been falsified?

Yes, if "loose monetary policy" is defined as standard open-market purchases of short-term government bonds for cash in the context of a fixed medium- and long-run inflation target.