Tight Monetary Policy,Expansionary Policy and Invalidity——Comparative Study of Efficiency of Monetary Policy between U.S.A.and China around the Great Depression

A comparison is made based on efficiency of monetary policy for China and U.S.A.during the 1920s and 1930s.In U.S.A.whose economy is developed,monetary policy can only decelerate the economy rather than start it up,which is in accordance with modern monetary theory.However,in such an undeveloped country as China around the 1930s,currency supply can achieve both goals very well,which can not be explained by the theory.The invalidity of monetary policy in U.S.A.results from being a demand constraint economy.However,the supply constraint economy in China enables monetary policy to start up the economy.In the above mentioned economic state,tight monetary policy can slow the economy down or stop the economic growth.