A little bit of each.

1. My analysis of the Great Depression is monetarist in the sense that I believe inflation and demand-side business cycles are fundamentally monetary phenomena, to be explained by analyzing changes in the supply and demand for the medium of account.

2. My analysis is anti-monetarist in the sense that I consider gold, not money, to be the most important medium of account during the interwar period. And also because monetarists focus on changes in the supply of money, whereas I focus on changes in the demand for gold. Consider this equation:


Where G is the world gold stock, and Vg is the ratio of NGDP to units of gold. The unit would have been 1/20.67 ounce of gold prior to April 1933, and 1/35 ounce after February 1934. Because G increased at a fairly steady rate of roughly 2%/year, changes in NGDP must have been mostly due to changes in Vg, which you might think of as the inverse of the demand for gold.

The blogger Lorenzo did an excellent job of reviewing my book, and included this graph of the first 60% of the Great Depression:

Screen Shot 2015-12-05 at 12.02.19 PM.png

If you are wondering what caused all those zig zags in the growth rate of industrial production (and other zig zags up to 1940), then please buy my book.

Update: The graph is originally from Marcus Nunes.

PS. Over at MoneyIllusion I have another post on Ted Cruz—this time where he asks Janet Yellen about interest on reserves.