Milton Friedman's words "stable monetary background" refer to stable growth of broad monetary aggregates, not to the stable growth of monetary base. The chart of monetary base is irrelevant, you should present a chart of M3 growth.
Eric's post is a complete misrepresentation of Milton Friedman's views. The Fed had three separate massive QE programs during the Great Depression, yet Friedman is famous for insisting that money was too tight in a Great Depression, as he was looking at broad monetary aggregates and nominal spending trends.
There was a lot of contractionary policy by the fed in the Great Depression. If you think Friedman would have approved of tinkering like this to increase demand, I disagree.
The monetary base doubled in the Great Depression, but Milton Friedman said more tinkering was needed. Here is a good analysis that applies Friedman's views to the current situation:http://macromarketmusings.blogspot.com/2010/11/reply-to-those-who-claim-we.html
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