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Tag Archives: Milton Friedman

Mercatus Center Friedman symposium

The Mercatus Center has just published a new symposium looking at how Milton Friedman might have reacted to recent monetary policy issues.  Here is a list of the papers: Essays Beckworth, David. “What Would Milton Friedman Say about Financial Stability?” April 2022. Hendrickson, Joshua. “What Would Milton Friedman Say about the Coordination of Monetary and Fiscal Policy?” April 2022. Horan, Patrick. “What Would Milton Friedman Say about the Fed’s New Framework?” April...

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Antonio Martino’s Liberal Legacy

On Saturday March 5th, Italian economist and former minister Antonio Martino died at age 79. Martino was well known in libertarian and conservative circles: he was loosely associated with different think tanks and had been, in 1988-1990, the President of the Mont Pèlerin Society. Those who met him at conferences are likely to remember his contagious laugh and his knack for jokes. Martino came from a political family: his father, Gaetano, was Minister of Foreign...

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Great Stories and Weak Economics

The two were the most important players in economics in the last half of 20th century. From the 1950s through the 1970s, Samuelson, a Keynesian, thought fiscal policy was more powerful than monetary policy as a tool to manage the economy. Throughout his career he believed in a large amount of regulation, taxation, government spending, and redistribution. Friedman believed monetary policy was more powerful than fiscal policy and believed that the United States and other countries should...

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Monetary policy and central planning

Milton Friedman once debated Robert Mundell on exchange rates. Mundell advocated using monetary policy to fix the exchange rate, whereas Friedman suggested that this sort of price control was interfering with the free market, and thus a bad idea. Friedman was probably right that fixed exchange rates are a bad idea, but his argument was flawed in two very important respects. First, Mundell was advocating the targeting of nominal exchange rates. The real exchange rate...

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The Pros and Cons of Irish Democracy

If regular democracy isn’t doing so well, maybe it’s time to fall back on “Irish Democracy.” That’s what Yale political scientist James Scott calls the passive resistance of a society that doesn’t like what its rulers are doing to it. In his book “Two Cheers for ­Anarchy,” he writes, “One need not have an actual conspiracy to achieve the practical effects of a conspiracy. More regimes have been brought, piecemeal, to their knees by what was once called ‘Irish...

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When forecasts don’t pan out

There’s no shame in making forecasts that prove inaccurate; I’ve done so many times. Nonetheless, it is useful to try to figure out why a particular forecast didn’t pan out. Stephen Rose has a paper on the effects of trade on the US economy, which contained this observation: [T]he notion that the United States can continue to run trade deficits is incomprehensible for many people. In 1988, Harvard finance professor Benjamin Friedman in his book Day of Reckoning wrote...

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How One Short Story Changed Someone from Left to Libertarian

I gave a talk on Milton and Rose Friedman today to an audience of about 60 law school professors and judges. It went well, by the way. One of my slides, labeled “Equality of Outcome,” was a quote from Milton and Rose Friedman’s Free to Choose: The ethical issues [with fairness] involved are subtle and complex. They are not to be resolved by such simplistic formulas as “fair shares for all.” Indeed, if we took that seriously, youngsters with less musical skill should...

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Is market monetarism actually “monetarist”

In a recent review of my new book, George Selgin makes the following remark: By then Sumner’s way of thinking had grown into a movement dubbed “Market Monetarism.” The moniker has stuck; but it isn’t all that felicitous. Though Sumner was himself a University of Chicago PhD, most Chicago-school Monetarists were, and are still, convinced that inflation is the best indicator of the stance of monetary policy. If prices rise too quickly, monetary policy must be too loose....

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Milton Friedman’s Long-Run Impact

The truth is somewhere between the two extremes. While Milton Friedman has not had as much effect on economic thinking and policy as many of us free market advocates would like, he has nevertheless had a huge impact. On economic thinking, the following of Friedman’s ideas have held up well: that monetary policy is potent; that a contraction in the money supply between 1929 and 1933 helped put the “Great” in “the Great Depression”; that inflation “is always and...

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Is inflation always a monetary phenomenon?

Here’s Megan McArdle, stating a famous old monetarist maxim: I think McArdle is 75% correct, in the sense that 3 of the 4 plausible interpretations of this ambiguous statement are true.  Here are the 4: 1.  Inflation is always a fall in the value of money.  (Tautologically true, but uninteresting.) 2.  Inflation is always caused by an increase in the money supply. (False) 3.  Periods of sustained and high rates of inflation are always caused by rapid money growth....

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