The Great Contraction, 1929-1933

The Great Contraction addresses the central economic event of the century, the Great Depression. It argues that the Federal Reserve could have stemmed the severity of the Depression, but failed to exercise its role of managing the monetary system and ameliorating banking panics. The book served as a clarion call to the monetarist school of thought by emphasizing the importance of the money supply in the functioning of the economy—a concept that has come to inform the actions of central banks worldwide.