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This doctrine--that in the long run the Great Depression would turn out to have been "good medicine" for the economy, and that proponents of stimulative policies were shortsighted enemies of the public welfare--drew anguished cries of dissent from those less hindered by their theoretical blinders. British economist Ralph Hawtrey scorned those who, like Robbins and Hayek, wrote at the nadir of the Great Depression that the greatest danger the economy faced was inflation. It was, Hawtrey said, the equivalent of "Crying, 'Fire! Fire!' in Noah's flood."  

This doctrine--that in the long run the Great Depression would turn out to have been "good medicine" for the economy, and that proponents of stimulative policies were shortsighted enemies of the public welfare--drew anguished cries of dissent from those less hindered by their theoretical blinders. British economist Ralph Hawtrey scorned those who, like Robbins and Hayek, wrote at the nadir of the Great Depression that the greatest danger the economy faced was inflation. It was, Hawtrey said, the equivalent of "Crying, 'Fire! Fire!' in Noah's flood."  

[[John Maynard Keynes]] also tried to bury the liquidationists in ridicule. Later on [[Milton Friedman]] would recall that at the Chicago University where he went to graduate school such dangerous nonsense was not taught--but that he understood why at Harvard-where such nonsense was taught-bright young economists might rebel, reject their teachers' macroeconomics, and become followers of Keynes. ''Friedman thought that Keynesianism was wrong--but not crazy.''  Friedman points out the Federal Reserve Board did not do what it was created to do -- act as lender of last resort to keep the money supply from shrinking, which caused the banking crisis.

[[John Maynard Keynes]] also tried to bury the liquidationists in ridicule. Later on [[Milton Friedman]] would recall that at the Chicago University where he went to graduate school such dangerous nonsense was not taught--but that he understood why at Harvard-where such nonsense was taught-bright young economists might rebel, reject their teachers' macroeconomics, and become followers of Keynes. ''Friedman thought that Keynesianism was wrong--but not crazy.''  Friedman points out the Federal Reserve Board did not do what it was created to do -- act as lender of last resort to keep the money supply from shrinking, which caused the banking crisis. On analyst has commented, "the answers that Keynes produced were good enough for people to think they were right.  But all he really did was give an aspirin for a brain tumor.  It dulled the pain only slightly but enough to stop people looking for real answers....It might even be argued that, had the world econmomy recovered in the early thirties, [[Hitler]] might never have been able to appeal to German poverty, and [[World War II]] might also never have happened." <ref> Harry Schultz, ''Bear Market Investment Strategies'', Dow Jones-Irwin Co., 1981, pg. 215.</ref>

However, the "liquidationist" view carried the day. Even governments that had unrestricted international freedom of action--like France and the United States with their massive gold reserves--tended not to pursue expansionary monetary and fiscal policies on the grounds that such would reduce investor "confidence" and hinder the process of liquidation, reallocation, and the resumption of private investment.

However, the "liquidationist" view carried the day. Even governments that had unrestricted international freedom of action--like France and the United States with their massive gold reserves--tended not to pursue expansionary monetary and fiscal policies on the grounds that such would reduce investor "confidence" and hinder the process of liquidation, reallocation, and the resumption of private investment.