just discretionary central banking. Dowd agrees with Friedman that a consistent three-to-five percent growth in the money supply would insure stable economic growth and would have ameliorated the severity of the Great Depression (a contention heavily dependent upon the stability of the velocity of money), but he disagrees with the contention that a system of automatic rules would have assured such a money supply growth to any extent greater than that which would have occurred in a completely free banking system.
Dowd argues that banks should be permitted to fail, and that both the banking system and the economy will be stronger as a consequence over the long-term. By contrast, Goodhart argues that central banking is necessary to preclude the development of adverse economic consequences stemming from
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