When Anna Talks, People Listen

This City Journal article discusses Anna Schwartz who worked with Milton Friedman and is considered a revolutionary montetary economist.

Ms. Schwartz believes the feds are on the wrong course to solving our economic woes.

Yet isn’t Bernanke a disciple of Friedman and Schwartz? He publicly refers to them as mentors, and, thanks to their scientific breakthrough, he has famously declared that “the Great Depression will not happen again.” Bernanke is right about the past, Schwartz says, “but he is fighting the wrong war today; the present crisis has nothing to do with a lack of liquidity.” President Obama’s stimulus is similarly irrelevant, she believes, since the crisis also has nothing to do with a lack of demand or investment. The credit crunch, which is the recession’s actual cause, comes only from a lack of trust, argues Schwartz. Lenders aren’t lending because they don’t know who is solvent, and they can’t know who is solvent because portfolios remain full of mortgage-backed securities and other toxic assets.

Read the whole piece. The article is both educational and it is a pleasure to learn about such an amazing person and woman who had so much influence on Economics (both here in the US and globally). I love City Journal!