I know that both Friedman and Bernanke wrote papers (or books, in Friedman's case) about the cause of the Great Depression. How do their points of view compare and contrast?
migrated from economics.stackexchange.com May 4 '12 at 4:37
This question came from our site for economists and graduate-level economics students.
Bernanke has sort of answered this question himself, in his Remarks On Milton Friedman's Ninetieth Birthday.
Friedman argued that the depression was basically caused by the Fed's contractionary monetary policy, and Bernanke seems to be in broad agreement with him, going so far as to say:
There seems to be some disagreement between the two on the relevance of the non-monetary effects of bank failures. Bernanke argued that
Friedman dismissed this, pointing to Canada as an example of a country that had no significant bank failures, but had a depression as severe as the US, due to the fact that their monetary policy was tied to that of the US.
However, Bernanke qualified this disagreement: