Now, at this level of specifics please do not read too much confidence into my words -- I read only parts of Friedman and Schwartz, long time ago and, most unfortunately, before I was able to appreciate that work fully --- but my understanding of their criticism differs from yours.
I believe that monetarists, starting with and based largely on the FS work, actually fault the (then young) Fed for doing little or nothing when the time was precious. I do not remember the data now but seem to recall that they actually decreased the money supply when should've increased it. [ The reasons were manifold but some had to do with the strength of the pound, outflow of gold, and... the fact that representatives of the member banks were unsure of what their role actually was ]
I always thought that the upshot of FS was that the monetary intervention would have clearly saved the day. If so, this is an argument for, not against, the Fed. The recession became a Depression because of (i) the Fed's inactivity and (ii) the New Deal, i.e., a Keynesian intervention. It is for that reason that there is still an argument, as you pointed out, about the reasons for Depression. As far as I know, not a single person has shown anything problematic with the FS analysis; they tend to pretend that this work is simply nonexistent -- a typical posture by those that cannot refute what you say and yet refuse to accept the conclusion of your argument.
It is not surprising, therefore, that Krugman "disagrees." It is the same Krugman that a couple of weeks ago published an article, "Reagan Did It," in which he attributed the current crisis to Reagan policies. I KNOW that he would not accept such nonsense from a student. The more provocative the thesis, the more thorough the argumentation should be. He offered vitriol instead. I am not surprised, therefore, that Krugman "disagrees" with FS without telling us why.
Like you, I continue to educate myself on the subject (not specializing in macro economics, I have only a limited time for doing so --- unfortunately, given how important this issue is nowadays). May I suggest a book "FDR's Folly: New Deal or Raw Deal?" if you have not read it already? The author talks, in particular, about how the work of RS is met by the present-day economists. It's NOT an economics book, but, personally, I could not detect any immediate errors in the author's use of it either.
I thank you too for sharing your knowledge and look forward to reading your future posts.
That's true but they clearly say that the private private clearinghouse associations did a much better job in 1907 and 1893 than the Fed did in 1929,
In his book Capitalism and Freedom, He writes on page 44:
"It is instructive to compare experience as a whole before and after (the Fed's) establishment--say from just after the Civil War to 1914 and from 1914 to date,to take two periods of roughly equal length.
"The second period was clearly the more unstable economically, whether instability is measured by the fluctuations in the stock of money, in prices, or in outputs...(E)ven if the war and immediate postwar years are omitted, and we consider only the peacetime years from, say, 1920 through 1939 and 1947 to date, the result is the same. The stock of money, prices and output was decidedly more unstable after the establishment of the Reserve System than before...
"...the crude comparison should at least give the reader pause before he takes for granted, as is so often done, that an agency as long established, as powerful, as pervasive as the Federal Reserve System is performing a necessary and desirable fundtion and is contributing to the attainment of the objective for which it was established."
He also said we should get rid of the Fed but I can't remember where or when.