From the point of view of today's mainstream schools of economic thought, government should strive to keep the interconnected macroeconomic aggregates money supply and/or aggregate demand on a stable growth path. When threatened by the forecast of a depression central banks should pour liquidity into the banking system and the government should cut taxes and accelerate spending in order to keep the nominal money stock and total nominal demand from collapsing.  At the beginning of the Great Depression most economists believed in Say's law and the self-equilibrating powers of the market and failed to explain the severity of the Depression. Outright leave-it-alone liquidationism was a position mainly held by the Austrian School.  The liquidationist position was that a depression is good medicine. The idea was the benefit of a depression was to liquidate failed investments and businesses that have been made obsolete by technological development in order to release factors of production (capital and labor) from unproductive uses so that these could be redeployed in other sectors of the technologically dynamic economy. They argued that even if self-adjustment of the economy took mass bankruptcies, then so be it.  An increasingly common view among economic historians is that the adherence of some Federal Reserve policymakers to the liquidationist thesis led to disastrous consequences.  Regarding the policies of President Hoover , economists like Barry Eichengreen and J. Bradford DeLong point out that President Hoover tried to keep the federal budget balanced until 1932, when he lost confidence in his Secretary of the Treasury Andrew Mellon and replaced him.    Despite liquidationist expectations, a large proportion of the capital stock was not redeployed but vanished during the first years of the Great Depression. According to a study by Olivier Blanchard and Lawrence Summers , the recession caused a drop of net capital accumulation to pre-1924 levels by 1933.  Milton Friedman called the leave-it-alone liquidationism "dangerous nonsense".  He wrote:
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When we look back over history – nothing could be further from the truth. This assumption instead reflects an elementary logical error, that may be quite dangerous for your personal future standard of living, if it leads to your drawing the wrong conclusions. The term “dollar” is only a name (the same holds true for the “pound”, “franc”, “peso”, “mark”, and all other currencies). What matters is not the name, but the set of rules – or collateral – that back the value of the currency, during a particular historical period. When we look back over long-term history, then sometimes it is gold, sometimes it is silver, sometimes it is both, and sometimes it is something else altogether. (As a creature of politics, money has always been of a complex and quite variable nature, given enough time.)