1) The money growth fell behind manufacturing growth for the entire decade; and the U.S. maintained a balance of trade surplus or, at the worst, was even, throughout the 20s;
2) in addition to that, we had net inflows of gold, for which the Fed was to pump up the money supply proportionally---it didn't;
3) there is NO scholarship that can identify a stock "bubble" as defined by stock prices wildly out of kilter with company values and/or reasonable expectations. The very stocks that were soaring were the same companies that were booming---utilities, cars, radios, and so on. What's interesting is that several economists have asserted a bubble existed, but as of 2000 when I last surveyed the scholarship on this, there were not studies that found a bubble and two that found exactly the opposite;
4) the Fed allowed the money supply to plunge 1/3 after the stock market crash, and failed to perform the role of lender of last resort for crucial big banks like Bank of United States and the big Nashville bank (whose name escapes me).
We came up waaaaayyyy short on money compared to goods---the classic definition of deflation. Bernanke is 100% right.
1) The money growth fell behind manufacturing growth for the entire decade; and the U.S. maintained a balance of trade surplus or, at the worst, was even, throughout the 20s;
False. If U.S. had balance of trade surplus throughout '20s as you contend, then by definition (Econ 101) money supply grew through this trade.
2) in addition to that, we had net inflows of gold, for which the Fed was to pump up the money supply proportionally---it didn't;
False again. By definition if the U.S. had inflows of gold going into their vaults as you contend, then they printed more money to redeem the gold with. Or, is it your wild contention that citizens made DONATIONS of gold to the government. Point in fact U.S. money supply growth was 60% in the Roaring 20s. It was in fact reckless. It was done to help bail out England from WWI.
3) there is NO scholarship that can identify a stock "bubble" as defined by stock prices wildly out of kilter with company values and/or reasonable expectations. The very stocks that were soaring were the same companies that were booming---utilities, cars, radios, and so on. What's interesting is that several economists have asserted a bubble existed, but as of 2000 when I last surveyed the scholarship on this, there were not studies that found a bubble and two that found exactly the opposite;
False. See my earlier point on money supply growth which led to the bubble and a host of malinvestments. True there were companies that were booming during this time but once every household which had electricity bought a radio, washing machine and car - where were the new customers supposed to come from after that? Hence a business downturn was due.
4) the Fed allowed the money supply to plunge 1/3 after the stock market crash, and failed to perform the role of lender of last resort for crucial big banks like Bank of United States and the big Nashville bank (whose name escapes me).
False. The Fed choked off money supply growth and raised interest rates starting in 1928. In fact, starting in January 1928 the Fed raised rates four times from 3.5% to 6% thus setting the stage for the market downturn. The smart money guys like Joe Kennedy and Bernard Baruch saw the money supply contraction taking place and got their money out of the market well in front of the crash. You did get one thing right in your entire post. The Fed did continue constraining money supply growth right through 1933. I'll give you credit for that. LOL
A better comparison is credit to GDP. In 1929, it reached 260%, today it's more like 300% which the Fed controls mainly by adjusting reserve requirements. You can see in this table http://www.federalreserve.gov/releases/h3/hist/h3hist5.txt that reserves are up about 25% since 1975 while the monetary base (the banks' supply of credit) has increased from 108 billion to almost 800 billion.