The golden age of the quantity theory

Recent Books making and policy coordination in the European Community. Unlike the case of the fixed exchange rates of the 195Os, where economists and policy makers clearly understood the nature of the external constraint, the current situation is vastly different and subject to rapid change, and there is much uncertainty about the nature of the additional constraints now in place. Chapter topics include global financial integration and current account imbalances; the solvency constraint and fiscal policy in an open economy; external constraints on European unemployment; and France and Germany in the EMS-the exchange rate constraint. The Golden Age of the Quantity Theory. David Laidler. Princeton, NJ: Princeton University Press, 1991. 220 pp. $35.00 ISBN O691-04295-o. Laidler focuses on the evolution of neoclassical monetary economics beginning with what is described as “British monetary orthodoxy” in the 1870s. He maintains that neoclassical monetary economics, with the quantity theory of money playing a central role, contributed to the collapse of the gold standard and the eventual use of various managed money systems after World War I. Laidler discusses the neoclassical theory of the price level; the monetary approach to neoclassical cycle theory; Wicksell and the quantity theory; and neoclassical monetary theory and monetary institutions. The Great Savings and Loan Debacle. James R. Barth. Lanham, MD: AEI Press, 1991. 170 pp. $7.95 ISBN o-8447-7008-6. Barth places blame for the savings and loan collapse of the 1980s on the seriously flawed deposit insurance system and inadequate regulation and supervision allowed by Congress, the administration and federal and state regulators. He argues that the federal deposit insurance system allowed already weak institutions to continue operating while increasing risk to taxpayers. And he adds that short-sighted policies of regulation and supervision prevented S&Ls from adapting to changes in the marketplace. Barth begins with a review of the early years of the S&L industry, examining activity during the Great Depression and postwar years. He then examines the 1980s including in his discussion failures and resolutions, causes of the debacle, and the cost of the cleanup. In one section, Barth gives an overview of the Financial Institutions Reform, Recovery, and Enforcement Act, and in another he discusses proposals for reforming the S&L system. 190