While I´m a firm believer in the importance of monetary policy I don´t believe it made much of a difference in the New Deal era. As figure 3 shows, changes in nondefense spending – hiring people to build roads, dams and the like, explain subsequent changes in real GDP growth rates exceptionally well from 1934 to 1938. This simple model explains more than 90% of the change in real GDP growth rates over that period.
OK, he finds a positive relationship among second derivatives (changes in growth rates) of the relevant variables, but in this “picture war” I think my pictures, showing LEVELS of variables and associating their behavior with the monetary policy reversal in March 1933 when FDR took the US off Gold and announced a “price level target”, are much more convincing. (Note: they come from this post from early this year).