So Anna Schwartz has clearly forgotten what she and Professor Friedman said about the causes of the Great Depression and the subsequent contraction in 1937.

Wonks Anonymous recalls that they made a brilliant case that the Bank Failures following the crash of 1929 caused a dramatic contraction of the money supply that, according to them, caused the depression and deflation.

He remembers that they also argued that contractions of the money supply in 1937 extended the Depression.

But now Ms. Schwartz seems to feel that the financial panics of 2008 would not have caused bank failures and destroyed the money supply and that the Fed should step aside and let the markets sort things about, after it contracts the money supply.

Because the problem right now is that credit is too easy and there is too much money in circulation.