It was the singular achievement of Murray Rothbard's America's Great Depression to have demonstrated that the Great Depression was a crisis manufactured and prolonged by the attempts to stop an inevitable downturn. The policy response — creating more money, propping up prices, ginning up employment, and a host of other devices — took a stock-market price collapse and a banking liquidation and spread the mess throughout every sector of the economy. What might have lasted a year to 18 months instead lasted 16 years.
At the time, Ludwig von Mises tried to warn against intervention. See his Causes of the Economic Crisis. So did F.A. Hayek. See his Prices and Production. So did Lord Robbins. See his book The Great Depression.
And yet, that is not the conventional wisdom. The conventional wisdom is that the Depression was a natural disaster, a hurricane that swept through society that had to be fixed by the government. Another view, found in the work of the monetarists, is that it was caused by the failure of the government to create oceans of paper. This seems to be the view of Bernanke.
