Two well-written articles remembering the life of Anna J. Schwartz include the June 21 New York Times article titled “Anna Schwartz, Economist Who Worked With Friedman, Dies at 96” as well as the June 22 Bloomberg BusinessWeek article titled “Anna Schwartz, Economist Milton Friedman’s Co-Author, Dies at 96.”
Although both article are well worth reading in their entirety, I would like to highlight some excerpts from the Bloomberg BusinessWeek article:
The first book that Schwartz wrote with Friedman, “A Monetary History of the United States, 1867-1960,” had “critical influence” on the outlook “of a generation of policy makers,” Bernanke said in 2003, when he was a Fed governor.
Published in 1963, the book advanced the idea that the Great Depression had been triggered by the central bank’s reduction in the U.S. money supply from 1928 until the early 1930s. That contradicted the prevailing view that it resulted from the 1929 stock-market crash.
In a 2008 interview with Barron’s, Schwartz said the government needed to stop injecting liquidity into markets and reacting to the credit crisis with ad hoc programs.
“If I regret one thing, it’s that Milton Friedman isn’t alive to see what’s happening today,” she told the magazine. Referring to Bernanke, she said, “It’s like the only lesson the Federal Reserve took from the Great Depression was to flood the market with liquidity. Well, it isn’t working.”
Schwartz said in a July 2009 commentary for the New York Times that Bernanke, the architect of the central bank’s emergency programs, didn’t deserve reappointment as Fed chief.
“Mr. Bernanke seems to know only two amounts: zero and trillions,” she said, referring to his policy of holding the target interest rate near zero and the expansion of the Fed’s assets to $2 trillion in July 2009, more than double the level of early 2008. The U.S. Senate’s 70-30 vote to approve Bernanke for a second four-year term in 2010 marked the greatest opposition to a Fed chairman since the office became subject to Senate confirmation in 1978.
For those unaware, the aforementioned “A Monetary History of the United States, 1867-1960” seems to have had an almost monumental influence on multiple fronts. While my thoughts on the book are complex – especially with regard to its description and interpretation of The Great Depression – the book appears to have had immense influence on both the putative causes of The Great Depression as well as a preeminent reference as how to avoid Depression conditions. It strongly appears as if the book has had a strong influence on Ben Bernanke’s economic interpretations and actions.
I highlighted the quotes and thoughts from Anna Schwartz concerning the various intervention efforts from 2007, as well as her thoughts on Ben Bernanke’s actions, as I believe these thoughts deserve greater recognition.
The Special Note summarizes my overall thoughts about our economic situation
SPX at 1331.50 as this post is written