I recently watched a video from a known Youtube statist loud-mouth (http://youtu.be/REtwYhqhr_o) in which he makes a statement that bothers me to this day.
In the 1920's I can see that prices fell down pretty nicely, while we know from for example Rothbard's book "American's Great Depression" that 20's were pretty inflationary times with Fed expansion of the money supply.
So am I missing something or did USA saw so great growth that even with inflation some parts of the 1920's did not saw increase in prices?
Yes, you're missing the part where the money supply shrank by almost a third in the four years from 1929-1933. Milton Friedman and Anna Schwartz documented this in their A Monetary History of the United States (a work that was part of what won Friedman a Nobel Prize). The chapter on The Great Depression was published as a standalone book, titled The Great Contraction, which is how Friedman called it...referring to the money supply.
But I'm talking specificly about the time around 1920 to 1928 when there were "deflationary" periods during Fed inflation.
A picture from Rothbard's book, where we can clearly see the inflation of the money supply.
Some statistics for prices in the 1920's.
If the money supply increased all over before the great contradiction, shouldn't we see increase in prices during the whole of 1920's, not just 1928?