Milton's Paradise Lost
by Paul Krugman
Brad DeLong has a good piece about a failure of Friedmanism. we suspicion we competence add a bit upon financial policy as well as a Fed.
When wearing his veteran economist hat, what Friedman unequivocally argued was which a Fed could easily have prevented a Great Depression with policy activism; if only it had acted to prevent a big tumble in broad financial aggregates all would have been well. Since a big decline in M2 took place despite taking flight financial base, however, this would have required which a Fed "print" lots of money.
This claim right away looks wrong. Even big expansions in a financial base, whether in Japan after 2000 or here after 2008, do little if a manage to buy is up opposite a 0 reduce bound. The Fed could as well as should do more though it's a much harder pursuit than Friedman as well as Schwartz suggested.
Beyond that, however, Friedman in his role as political disciple committed a critical sin; he
consistently skewed his own economic work. What he had unequivocally shown, or suspicion he had shown, was which a Fed could have prevented a Depression; though he transmuted this into a claim which a Fed caused a Depression.
And this degenerate as well as misleading chronicle is what has filtered down to ! a likes of Ron Paul, who then use it to disagree opposite a very activism Friedman was unequivocally advocating.
Bad Milton, bad.
Related articles
- Thoughts upon a Paul-Krugman Debate (notesandobservations.me)
- Paul Krugman & Ron Paul Face Off upon Spending, Inflation, as well as The Fed (wallstreetpit.com)
- Ron Paul Just Went To Battle Against Paul Krugman Here's What You Missed (businessinsider.com)
- Defending Milton Friedman's Monetary Policy Prescriptions (Again) (wallstreetpit.com)
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