Thursday, June 04, 2009

What Would Milton Friedman Say?

Link.


8 Comments:

At 6/04/2009 2:19 PM, Blogger Robert Miller said...

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At 6/04/2009 4:17 PM, Anonymous Machiavelli999 said...

Umm...no Robert Miller.

Milton Friedman made a name for himself saying the Fed didn't do ENOUGH during the Great Depression to stimulate demand. If he was alive today, he would approve of everything Bernanke has been doing and would probably call for an even greater expansion of the balance sheet.

I'll grant it to you, he wouldn't approve of the stimulus, but everything else, especially the actions of the Fed, he would either approve of or say the actions are not ENOUGH!

 
At 6/04/2009 5:05 PM, Blogger Robert Miller said...

This comment has been removed by the author.

 
At 6/04/2009 6:46 PM, Blogger 1 said...

Milton Friedman had a lot to say...

Regarding the Great Depression, consider the following: The Great Depression According to Milton Friedman...

'The Great Depression created a widespread misconception that market economies are inherently unstable and must be managed by the government to avoid large macreconomic fluctuations, that is, business cycles. This view persists to this day despite the more than 40 years since Milton Friedman and Anna Jacobson Schwartz showed convincingly that the Federal Reserve’s monetary policies were largely to blame for the severity of the Great Depression'...

 
At 6/04/2009 8:17 PM, Blogger Size said...

"If he was alive today, he would approve of everything Bernanke has been doing and would probably call for an even greater expansion of the balance sheet."

Mach,

I don't think so. The depression resulted from an overly tight monetary policy (among other things). Liquidity was the issue. This time, monetary policy was not tight and bank solvency is the issue. Anna Schwartz, who co-authored "A Monetary History" with Milton Friedman, has criticized the current Fed for "fighting the last war". She believes adding liquidity is the wrong approach this time. There wasn't much that Ms. Schwartz and Mr. Friedman disagreed on regarding monetary policy.

Robert, I should think it's fairly easy to find out what Milton Friedman thought of the expansion in 2001 since he died in 2006. I do remember that he criticized Bush for reducing taxes (which he always favoured) without reducing government spending (which he always disliked). It's a real shame we don't have his opinion on current events.

 
At 6/04/2009 9:03 PM, Blogger 1 said...

two-part podcast conversation...

SEPTEMBER 4, 2006
An Interview with Milton Friedman


Friedman on the Surplus

 
At 6/04/2009 11:42 PM, Anonymous Cheech (in) Marin said...

It is gross misrepresentation of Friedman to say he'd want the Fed to do more. He didn't believe the Fed should even exist. He gave evidence that in the 75 year absence of a central bank other banks stepped up in credit crises. His criticism of Fed mistakes during the Great Depression was not a contradiction to his core beliefs.

The growth in the Fed's balance sheet isn't justified under Friedman's rule because we haven't had deflation from destruction of the money supply from bank runs.

Constant growth rate of money supply was his fundamental principle, not monetary activism. He would be very disconcerted at the deficit we've accumulated.

His loss is inestimable.

 
At 6/05/2009 10:39 AM, Anonymous gettingrational said...

Two-thirds of the U.S. GDP is personal expenditures so erratic monetary policies are the result. Easy money is needed to defeat slowdowns in spending to keep the economy growing because disposable income has shrunk.

I agree with Milton Friedman, a steady increase in money supply is the optimal but our economic policies need to change. Consumption needs to be fed by the increase in production of goods and services and not by higer levels of consumer and government debt per capita.

How do we find a market for goods and services to increase production? Increase exports to fair markets and decrease imports from unfair markets. This is our major policy challenge.

 

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