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” ‘I would like to say to Milton and Anna: Regarding the Great Depression. You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again.” – Ben Bernanke, November 8, 2002.

That was how Federal Reserve chairman Ben Bernanke concluded his remarks at a conference honouring Milton Friedman on his 90th birthday. Anna Schwartz was Friedman’s less famous yet no less significant collaborator; she died in June.

Bernanke refers to Friedman and Schwartz’s A Monetary History of the United States: 1867-1960, published in 1963, as “the leading and most persuasive explanation of the worst economic disaster in American history, the onset of the Great Depression”. Their research, which countered decades of Keynesian orthodoxy on the 1930s, placed the blame for what they dubbed the Great Contraction of 1929 to 1933 squarely at the feet of the Fed.

Bernanke read Monetary History as a graduate student and became a self-described Great Depression buff. Not convinced the 1929 to 1933 contraction of the money supply was sufficient to account for the fall in output, he offered an additional explanation in a 1983 paper, “Nonmonetary Effects of the Financial Crisis in the Propagation of the Great Depression”.”