their money) the ratio of bank deposits to bank reserves (when banks feel safer, they loan out more of their money) high-powered money (that is, anything that serves as cash or reserves) The money supply (cash + deposits) can be computed from these three numbers. The supply shrinks when people withdraw money from the bank, banks hold more reserves, or high-powered money leaves the country (e.g., gold is exported). During a crisis, all three can happen. Another theme is gold. For the time period, it was the unit used for international trade with Europe. So even when the US is not on the gold standard, it plays a significant role. The authors are precise about the gold standard. The authors say the US was on the gold standard from 1879 to 1923. That is, paper money could be exchanged for bullion and international trade was settled immediately with gold. From 1923 to 1933, the authors say that international trade was "sterilized" by the Fed inflating the money rather than immediately being settled by gold. Lastly, they term the period from 1934 to 1960 (when the book was published) as a "managed standard". Paper money cannot be exchanged for bullion. The authors compare gold to a subsidized commodity, like grain. Another theme is silver. China and Mexico used it for their currency and the US used it for smaller coins. From 1879 to 1897, there was a populist push to switch the gold-backed dollar to silver. The US Treasury bought silver, but that didn't help when the country was on gold. Later, during the Great Depression, the US bought gold at inflated prices to help silver miners. The result was tragic for the money supplies of China and Mexico. The authors measure the velocity of money. The authors talk about it a lot, but do not make any conclusions about it. Lastly, a theme is decision making at the Federal Reserve. The authors try to find out the people making the decisions and what information they had. Probably just as important is the decision making process. The NY Fed Bank initially lead the decision making process, but eventually it migrated to the Federal Reserve Board in Washington, DC. To a lesser extent, the Secretary of the Treasury's decisions are included. Thesis The thesis of Monetary History is that the money supply affects the economy. In the final chapter, they specify 3