Monetarists and Keynesians

Kane asked a question yesterday in class about what Milton Friedman would have done about the 2008-2009 economic crisis.  My expectation is that Friedman would have argued for monetary expansion and that it would have been interesting to hear his thoughts about fiscal stimulus.

Since we have Krugman and Stiglitz as major advocates of fiscal stimulus (along with Wolf, actually), here is a piece by someone (Ramesh Ponnuru) working more in the monetarist tradition.  You may be interested in the first part - on whether or not stimulus worked - but for the moment I am particularly interested in the latter part of the paper where the Fed is brought into the equation.  From a monetarist's perspective, significant expansion of the money supply could have provided economic stimulus without additional accumulation of debt.

Needless to say, a Keynesian could return with questions about this analysis.  One is the conflation of the deficit and national debt with the stimulus, when in fact stimulus is only a fraction of the deficit.  Another is the implication that monetary expansion worked from 1932 onward to come out of the Great Depression, while overlooking the fact that simultaneous fiscal stimulus (which the author opposes now) interacted with any monetary expansion then; also, there is some good evidence that fiscal stimulus was ultimately necessary in that case, having been removed in the mid-late 30s (with a resulting depressionary echo in 1937) and ultimately taking the form of massive government spending for World War II (which marks the definitive end of the Depression). 

Anyway, the debate could go on, but the main point is that here is an argument that I think can safely be categorized as monetarist in the Milton Friedman tradition.  The debate seems one that would be of interest to many of you.