[CobaltBlue]

Friedman & Schwartz don't get down and dirty with the statistics like I want to. From reading contemporary newsmagazines, like "Time," I know that for some months after the Great Crash of 1929, nobody seems to have suspected that anything was wrong, although the depression in agriculture was long-standing. I want to look at monthly credit statistics state-by-state to see if I can tell when the tsunami started.

The funny thing about tsunamis is that you can't see them coming. If you are a ship at sea, you won't even notice them passing under you. It's not until they hit land that they rise up and smash everything.

Last night I was reading a paper about the depression of 1920-1921, which pointed out that prices dropped by over 40%, while employment and output also dropped considerably, but it was short and brief, and we've forgotten it. Why? That's a very good question. The author suggests that wages were more flexible. Another suggestion I would make is that the world had not gone back onto the gold standard yet. But I don't really know the reason.

http://www.gmu.edu/departments/economics/bcaplan/econ.html

Just to show the support for the other side of the question, here's a link to a pro-paper money organization that seems interesting.

http://www.monetary.org/

[Pelham]

The recession of 1920-21 is a typical downturn you see after a war. The vast increase in goverment spending for WWI caused inflation, and the dramatic drop off in spending once the war ended resulted in recession. Many economists likewise feared a return of the Depression when WWII ended, but it actually marked the beginning of a long expansion. The Great Depression was an entirely different sort of animal than the recession following WWI.