Many on the left, such as hack journalist Naomi Klein, blame our current mess on Milton Friedman and his economic policies. (1) Others, such as current Fed chairman, Ben Bernanke, claim to be a follower of the Nobel Prize-winning economist. After admitting the Great Depression was the Federal Reserve’s fault, like Friedman and his colleague Anna Schwartz claimed, Bernanke said: “But thanks to you, we won’t do it again.” (2) Since Friedman believed what caused the depression was rampant deflation, Bernanke presumably believes the Fed’s massive increase in the quantity of money will stabilize today’s economy. So is he following Friedman’s advice? Well not quite, you see, Friedman thought we should go ahead and abolish the Federal Reserve:
Friedman on the Great Depression and bank runs
Friedman’s colleague, Anna Schwartz
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(1) Reason.com – Defaming Milton Friedman (Naomi Klein) http://www.reason.com/news/show/128903.html
(2) Wall St. Journal – Bernanke Is Fighting The Last War http://online.wsj.com/article/SB122428279231046053.html
This interview took place on May 22, 2006, when Milton Friedman was 93 years of age. He categorically denied that any country today, short of North Korea, is truly socialist, in a sense that government seizes control of the means of production. But his words about government spending, the Federal Reserve and the competency of a Federal Reserve Chairman are chilling, a short 3+ years later.
Said Friedman: “Sooner or later, government will want to raise money without imposing taxes; they will want to spend money. And so, I hesitate to join those who are predicting 20 years inflation at 2% per year. Because of temptation for governments to lay their hands on that money is going to be very hard to resist.”
Interviewer: “Does Mr. Bernanke look pretty good to you?”
Friedman: “Yes, he looks very good to me. But we’ll have to see…You must understand that the fundamental problem is you shouldn’t have an institution which depends on whether he’s good or not. My first preference would be to abolish the Federal Reserve. Stop the growth of government. Bring government down and make it smaller.”
Friedman was right on.