Certain instances of collective memory lapses have convinced some people that we're living in an alternate reality. Contrary to popular belief, the queen in Snow White never says "Mirror, mirror on the wall," the Monopoly man doesn't wear a monocle, Nelson Mandela did not die in prison, and the Federal Reserve did not loosen monetary policy leading up to the Great Recession. Professor Scott Sumner may have uncovered the single most important case of the so-called "Mandela Effect" on his blog *The Money Illusion,* when he discovered striking parallels between the insufficient action taken by the Fed during the Great Depression, and the policy pursued under Chairman Ben Bernanke beginning in late 2007, as the housing boom began to collapse. Bernanke himself had written papers and given speeches where he clearly understood that the Federal Reserve had made the depression far deeper than it needed to be – allowing the money supply to rapidly contract, rather than stabilizing it with a credible promise to keep money and prices from falling off a cliff.
Sunday (2/25), Scott joins producer Charlie Deist to round out a three-part series on monetary policy and business cycle theory.