Friday, August 9, 2013

Is Rand Paul Clueless About the Monetary Theory of the Economists He References?

NRO's Patrick Brennan makes some important observations:
In an interview with Bloomberg Businessweek about his presidential chances and the appeal of his economic policies, Paul was asked the following by Josh Green:

Who would your ideal Fed chairman be?
Hayek would be good, but he’s deceased.

Nondead Fed chairman.
Friedman would probably be pretty good, too, and he’s not an Austrian, but he would be better than what we have.

Dead, too.
Yeah. Let’s just go with dead, because then you probably really wouldn’t have much of a functioning Federal Reserve.

I’ll give Senator Paul the benefit of the doubt and assume he did know Milton Friedman has gone on to the big bureau of economic research in the sky, but more important, his answer here does seem to indicate he doesn’t understand Milton Friedman’s views on monetary policy at all, with the corollary that he doesn’t seem to understand monetary policy, period.[...]

The problem: Milton Friedman[...] would likely have supported a much more aggressive monetary response to our economic downturn — a corpse running the Fed, in other words, would definitely not interest him like it does Paul. In fact, his views on monetary policy almost couldn’t be more different than Paul’s — he and Anna Schwartz made probably the most important 20th-century contribution to monetary-policy thinking with a 1963 book making the case that the 1929 stock market crash produced the Great Depression happened because the Fed was too passive and didn’t maintain a sufficient monetary supply (for a quick explanation of this argument, see Ramesh Ponnuru’s piece in the most recent issue of NR, which makes the case that something similar happened in 2008). So the less charitable view of Paul’s statement above is that he knows absolutely nothing about the history of monetary policy or Friedman’s thoughts on it.

The more charitable view, and probably more likely explanation (since he admits he knows Friedman didn’t hold Austrian views), is that Senator Paul misunderstands what Friedman stood for — with the effect of basically perverting the Nobel laureate’s lessons.


  1. How sad is it that he didn't mention his Dad for such a position?

    1. He won't touch his dad with a 10-foot pole.

    2. You need to get you head examined if you seriously believe you care more about Ron than his own son.

    3. How often do you construct these alternative realities in your head where you think you have insight to others inner thoughts? Not only do I not believe what you wrote, no where in my post do I suggest that.

      No wonder you write anonymously.

      Just to explain a bit further for you and the other anonymous below:

      The Federal Reserve has been a MAJOR talking point & focus throughout Ron Paul's life & career.

      Can you think of any one person OUTSIDE of those currently working for it that have devoted so much time, thought and discussion on the matter?

      The better question in that context is:

      How the hell can Rand NOT mention his father?

      Seriously, what kind of lapse in judgement is it?

      I can't think of a better person to "run" the Fed if it is going to exist, Jim Grant included.

  2. I'm baffled by the criticism of Rand here. Rand is informed with Austrian insights and wants a "dead" Federal Reserve. Even his dad suggested Jim Grant for chairman.

    Wenzel get over it. Even Rothbard supported Pat Buchanan and Rand is many times better than Buchannan!

    1. Buchanan had principles. Some were misguided, but everyone knew where he stood.

      What are Rand's core principles? Is there anything he isn't willing to sell out? We don't know because he is a typical politician.

  3. Funny that Rand could not name a living Austrian economist to run the Fed.

    Also funny that Rand does not realize Bernanke is following Milton Friedman now. Milton Friedman advised Japan to purchase long term bonds in 2000.

    Milton Friedman in 2000:

    " Now, the Bank of Japan’s argument is, “Oh well, we’ve got the interest rate down to zero; what more can we do?”

    It’s very simple. They can buy long-term government securities, and they can keep buying them and providing high-powered money until the high powered money starts getting the economy in an expansion. What Japan needs is a more expansive domestic monetary policy."

    1. He doesn't name a living Austrian because he doesn't want to give The Fed legitimacy. He correctly shifts the conversation from how a different monetary policy would affect the Fed to removing it as an option entirely.

  4. Anna Swartz was very disgusted with Bernanke: