As Mario Rizzo recently pointed out the debate in economic theory has become one of Hayek versus Keynes. Chicago School monetarism pretty much died when Friedman died. In my opinion, probably for the better.
Nevertheless, Friedman's co-author of Monetary History, Anna Schwartz, is alive and kicking at 93. She told Hirsh:
Ever since [Friedman's] death I have lamented the fact that he has not been around to express his views on what's going on....[There is a] big lack of a voice like Friedman's, someone who's got instinctive understanding of the way markets operate, a very profound knowledge of history..I don't believe we would have had a Fed balance sheet currently that has doubled, or tripled, in such a short period of time without any kind of Fed acknowledgment that it was creating a problem for itself [with] inflation already baked into the economy.
It appears that Schwartz may not be following the exact roller coaster details of Bernanke's moves, given her comment, and like many she appears to be watching the monetary base versus M2 nsa. I also wonder if a former Princeton professor would have bowed to the criticisms of Friedman.
All that said, it is great to see Schwartz cause some focus to be put on money supply.
Schwartz is also, rightly so,very critical of overall Obama economic policies. She tells Hirsh:
Obama nowadays is the typical believer that government can do everything. So he's going to change the way electricity is produced in this country. He's going to change the way energy is going to be produced in this country. And it's all going to be a government effort. And Friedman would say, 'Look, if these really are such desirable things, why isn't it that the private sector has taken advantage of an opportunity to make money and to improve things."And, as I am sure Schwartz knows, it has gone way beyond energy. Obama is a major league interventionist.
The full Newsweek interview is here.
Friedman's legacy was to leave behind reverence for the Fed and a belief in many that the Fed could be a force for good by engaging in sound, "pro-growth" disciplined monetary policy.
ReplyDeleteHe was a disaster for economics and a disaster for liberty. When you concede the Fed, you concede it all because money is the root of everything else in the economy.