Saturday, June 8, 2013

Is Milton Friedman a Statist?


This claim that Milton Friedman is a statist mostly belongs to Austrian Economists.  They think because Milton Friedman "supported" the federal reserve this makes him a statist.  This could not be further from the truth.

Let me be clear:  Milton Friedman DID NOT support the federal reserve.  Lets look at a quote:

"Any system which gives so much power and so much discretion to a few men, [so] that mistakes -- excusable or not-- can have far reaching effects is a bad system.  It is a bad system to believers in freedom just because it gives a few men such power without and effective check by the body politic --  this is the key political argument against any independent central bank...  To paraphrase Clemenceau:  money is much too serious a matter to be left to the Central Bankers"

This quote does not seem to support the Austrian hypothesis that Friedman was a statist in support of the federal reserve.  If you read enough Friedman or watch enough of his videos you will find him saying he is in favor of abolishing the federal reserve.  He also mentions many times that when he writes or talks about the federal reserve, he is theorizing given that it exists.  Furthermore, in his 1968 paper entitled "The Role of Monetary Policy" published in The American Economic Review he points out the proper way to conduct monetary policy is a "steady rate of growth in a specified monetary total".  This is exactly what we were doing with the gold standard by mining gold in other countries and bringing it to America.  His argument for this is that historically countries with a steady rate of monetary growth have had steady economic activity while countries with wild swings of growth have had wild swings of economic activity.

One other thing to point out is that if you want to learn about basic economic issues from a capitalistic point of view youtube Milton Friedman on whatever subject you wish to see and you will more than likely find plenty of videos all of which will be denouncing the government involvement in markets.

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