“Money in the Great Recession: Did a crash in money growth cause the global slump?” 

Held on Thursday, July 13, 2017, 12.30-2.15pm


  • Tim Congdon (Institute of International Money Research)

  • Lord Skidelsky (University of Warwick)

  • Philip Booth (St. Mary's University)



Why did so much, so quickly, go wrong in the main Western countries in late 2008? In his contributions to a new book Money in the Great Recession (of which he is also the editor), Tim Congdon suggests an interpretation of the Great Recession that takes its cue from Friedman and Schwartz’s interpretation of the USA’s Great Depression in their celebrated 1963 A Monetary History of the USA. In both cases, the growth rate of the quantity of (broad) money declined sharply. Indeed, in the relatively recent case of the ‘Great Recession’ all three badly-affected jurisdictions – the US, the Eurozone and the UK – suffered a plunge in money growth. 

Tim – who is now chairman of the Institute of International Money Research, as well as a professor at the University of Buckingham – says that the trouble stemmed, in particular, from official demands for a big increase in banks’ capital/asset ratios. That caused banks to shrink their risk assets, such as their loans to the private sector, and led to the destruction of money balances. Other contributors to Money in the Great Recession are kinder to the regulators; but the consensus in the volume is clearly in favour of a monetary explanation for the crisis.

That said, each of the contributors to the book has his own interpretation of exactly what went on, and what went wrong, and we are therefore delighted that two of those contributors have agreed to join Tim on the panel:

  • Lord (Robert) Skidelsky is Emeritus Professor of Political Economy at Warwick. He is also the distinguished biographer of Keynes, and his contribution focuses on how Keynes himself would have analysed the 2008-09 recession. In Skidelsky’s view, “he would have regarded the triggering cause… as the stiffening of the Federal Reserve’s policy stance” – though he would have approved of concerted central bank action in 2009, i.e. QE (and would have deplored what Skidelsky calls the UK’s “premature suspension” of QE in 2010).
  • Philip Booth has recently become Professor of Finance, Public Policy and Ethics at St. Mary’s University, Twickenham. He remains a Senior Academic Fellow at the IEA, where he was previously Academic and Research Director. His contribution focuses on the linkages between monetary policy and financial decision-making and asset market movements.

I don’t suppose for a moment that this is going to be light entertainment; these are difficult issues, and the problems involved are knotty. But drawing sensible conclusions from the 2007-08 crisis is enormously important – and, as far as Tim and his colleagues are concerned, it is not evident that policy-makers have yet absorbed the right lessons. If you (or a colleague) would like to join us, and perhaps share your own thoughts, please let us know by calling 0207 621 1056 or emailing alex@csfi.org. As usual, wine and sandwiches will be provided.

Sincerely yours,

Andrew Hilton

PS: There will be copies of the book available for sale, and I am sure the authors can be prevailed upon to sign them.