In a word, the theme of American Currency History is that "money is very important" is based on the consensus of financial research circles: money is an independent and controllable force, which has a great impact on the economy. In economic history, it may be difficult to find a better case than the subprime mortgage crisis that swept the world in 2008 to analyze and confirm the view that "money is very important". If the previous economic cycle basically spread from the investment and consumption activities in the real economy to the financial market, then the subprime mortgage crisis in 2008 can be said to be the first new economic cycle in the global sense. From the turmoil in the monetary and financial markets to the real economy, monetary and financial factors have become the most critical factors in economic fluctuations. The global financial tsunami is dominated by "toxic assets" made by financial institutions represented by Wall Street, which spread to the whole world through high leverage, and is a "currency demon" made by Wall Street itself. Money once again proves its importance from this level.
Under the global financial crisis, some American financial circles once thought that,
Fortunately, during the financial crisis, Professor Bernanke, who was famous for studying the Great Depression, happened to be the chairman of the Federal Reserve, which made the professional achievements on the Great Depression, which could only represent Bernanke's research level, quickly become the specific policy measures of the Federal Reserve. In the sense of ordinary textbooks, Bernanke and the Federal Reserve under his leadership adopted various policies and measures during the crisis. In traditional central banking, most of them are "atypical monetary policies", but the basic idea comes from Bernanke's research on the Great Depression. Among all kinds of profound studies on the Great Depression, Friedman and His History of American Currency are authoritative works. It is no exaggeration to say that Bernanke's research and current policies are deeply influenced by Friedman's American Monetary History. Readers can find theoretical clues about the current rescue policies of the Federal Reserve and global central banks from the analysis of this book.
In this way, under various opportunities, Friedman's American Monetary History was originally a somewhat obscure and professional economic and financial work, but now it is more like a bestseller in a professional work because of the relationship between the subprime mortgage crisis and the global financial tsunami: both policy makers and investors can find historical experience and theoretical enlightenment to understand the current financial crisis.
The history of American currency is like a source of inspiration and a detonator of wisdom, which has inspired generations of economists to re-examine the Great Depression. We can say that the main direction of the Great Depression research so far is the deep expansion of Friedman's "money supply perspective". The comprehensive expansion of "money supply perspective" covers almost all the achievements of contemporary macroeconomics.
Based on the money stock, this book studies the monetary development of the United States in the past century and its influence on a series of major historical events in the United States in 1867- 1960. The author through to
The detailed description of the causal relationship between the change of money supply and the inflation level proves the far-reaching influence of monetary policy on a country's economic operation, especially the important position of money in stabilizing the economic cycle. The book perfectly integrates complex and detailed historical statistics with economic analysis with keen insight. Many unique analysis and groundbreaking research conclusions in the book, such as the author's analysis and explanation of 1929- 1933 Great Depression, have changed people's ideas and deepened the global financial community's understanding of financial markets.
The detailed study of American monetary history is of great significance to us in the crisis and needs to be reread frequently. Studying this book, especially the comments on the silver standard, gold standard and credit standard, aroused my greater interest in the monetary system, which is also a key to open the contemporary capitalist system. After the debate about the monetary system was eliminated, the focus of finance and politics shifted to the banking system. Repeated crises in the banking industry have caused dissatisfaction. 19 13, Congress passed the Federal Reserve as a permanent measure. 19 14, the Fed system started to run. This profound change in the American monetary system occurred at the same time as the equally significant external change (with the outbreak of World War I, the connection between the external environment and the internal money supply was relaxed), which doomed the existence of the Federal Reserve system. The combination of these two changes has made 19 14 a major watershed in the history of American currency. The Fed system has also been given more powers, among which the power to adjust the reserve ratio is by far the most important. In the monetary system, the dollar depreciated against gold, and the characteristics of the gold standard also changed. The use of gold coins has been abolished, and it is no longer legal to hold gold coins or bullion. The Ministry of Finance can continue to buy gold freely from the mint at a fixed price, but the free sale of gold at a fixed price can only be used for international payment. Since the gold standard countries abandoned the gold standard in the Second World War and after the war, foreign exchange was widely used in other countries.
Supervision, the United States has effectively achieved credit standards. Gold has become a legal commodity, its price is supported by law, and it is no longer the basis of our monetary system in any sense.
Friedman's monetary history itself established the position of money as the core of economic regulation. A possible basic common ground between these two periods is the expectation of changes in economic stability. Other things being equal, a very reasonable explanation is that when individuals and enterprises expect the economic situation to be stable, they are willing to hold assets in the form of money, and in the case of economic turmoil and instability, the assets held in the form of quasi-substitutes for money will be less than they expected. After all, the main advantage of cash as an asset is its versatility. It can provide minimum restrictions and maximum flexibility when dealing with emergencies and taking advantage of opportunities. The more unstable the future, the greater the value of this flexibility, so the greater the demand for money may be, which also shows that liquidity changes with the expected changes.
There are three main contributions to the history of American currency:
First, discover the internal relationship between money supply and overall economic activities;
Second, explain1the unprecedented Great Depression in 1930s;
Third, successfully launched a "counter-revolution" against the "Keynesian Revolution" and re-established the important position of monetary theory in economics.
As for the first contribution, the summary of chapter 13 of American Monetary History clearly states [2]: "The purpose of investigating the monetary history in different periods and under different conditions is to find common laws from various seemingly unrelated or accidental events. At the same time, we have gained enough confidence that the common laws we have discovered are still applicable to other historical facts that have yet to be investigated and the phenomena that will happen in the future. Through the detailed investigation and analysis of American monetary history in the past hundred years, we have the following four findings: First, the change of money supply.
The dynamic process is closely related to the overall economic activity, monetary income and price level changes; sequence
Second, the relationship between monetary variables and overall economic activities is highly stable; Third, the fluctuation of monetary variables often has an independent source, and it is not a passive reflection of changes in overall economic activities. Fourth, regarding money, superficial phenomena are often deceptive, and the really important relationship is often just the opposite of the eye-catching appearance. We can foresee that the above three common laws will apply to the future monetary historical development, just as they apply to the long historical experience in the past. In addition, for the fourth discovery, we can't say that it is a very clear general conclusion. We expect the future historical development to provide more examples to support this discovery, just as the past history has provided a large number of examples. The aforementioned Friedman's Monetary Theory Framework, edited by Gordon, aims to clarify the analytical logic of American monetary history from the perspective of mathematical models.
The influence or popularity of the second submission is much greater than that of the first submission. The seventh chapter of American monetary history, Great Depression (1929- 1933), is 120 pages long, accounting for one seventh of the book. Princeton University Press has published this chapter independently, which shows that academic circles attach importance to this chapter. Friedman's "money supply perspective" is the most famous explanation of the Great Depression, although it has not been unanimously recognized by academic circles. Ben Bernanke, the current chairman of the Federal Reserve, is a famous contemporary scholar who studies the Great Depression. 1983, Berg published his masterpiece "How the Non-monetary effects of the Financial Crisis Exacerbated the Spread of the Great Depression", which was based on an in-depth interpretation of American monetary history and rethinking of the facts. "The relationship between the financial sector and the overall economy in the1930s cannot be fully explained from the perspective of money supply. The first difficulty of the monetary perspective is that it doesn't have monetary effects's theory on how to influence the real economy, which can explain why the currency non-neutrality lasted for so long in 1930s. The second difficulty from the monetary point of view is that the reduction of money supply in the 1930 s is not enough to explain the continuous decline of total output.
[3] "Berber's main theoretical contribution stems from his revision, innovation and perfection of Friedman's" money supply view ".
Friedman and Schwartz explained that the key variable of the Great Depression was "currency collapse", pointing directly at the Federal Reserve. The two masters cited a large number of facts to prove that the direct cause of the collapse of the money supply was the power struggle within the Federal Reserve, and the indirect cause was that the Fed officials lacked a correct understanding of the American economic and monetary difficulties at that time. Of course, Friedman also mercilessly criticized the incompetence and ignorance of American economists at that time. Readers can refer to the wonderful discussion in the seventh section of the chapter "Great Depression".
For the third contribution, Friedman himself attaches great importance to it. His autobiography Two Lucky Men, co-authored with his wife Ross, mentioned "the history of American currency" many times, revealing deep pride in his achievements between the lines. Friedman said: "Among the three volumes of currency history published by Schwartz and me, the most famous one is American Currency History. As I have said, this book has had a far-reaching impact on the debate between Keynesian school and monetarist school. Moreover, the book's explanation of the Great Depression in11930 s also profoundly influenced people's understanding of the government and inspired people to re-examine what guiding role the government can play in the overall economic activities. "
"It is hard for us to imagine that Friedman will have a better life. He was born in 19 12 and lived in the most controversial era in human history. With the rapid development of science and technology, there are countless wars and various doctrines have emerged. God has eyes, took a fancy to a short man and gave him all his talents to meet the needs of these big disputes. So he stood up and steadfastly defended human life and freedom until his death.
When the financial crisis swept the world, the mainstream economic thought seemed to turn to politics again.
When the government intervened in the turn, the importance of Friedman reappeared.