Milton Friedman on Money

by Russ Roberts on August 28, 2006

in Podcast

There are two books that dominate the economic landscape in the 20th century. The first is Keynes’s A General Theory of Employment, Interest, and Money. The second is Milton Friedman and Anna Schwartz’s A Monetary History of the United States, 1867-1960. The latter changed forever the way the profession and ultimately the general public looked at money, the Federal Reserve and inflation. It had an enormous impact on business cycle theory and theories of macroeconomic stability. I think it also changed the way central bankers looked at their job and how they behaved.

I recently spoke with Milton Friedman about the ideas in two of his books, A Monetary History and Capitalism and Freedom.

This EconTalk podcast
is the first part of that conversation. It focuses on monetary issues—primarily the role of the Fed, the idea that inflation is everywhere and always a monetary phenomenon and why central bankers such as Greenspan and Bernanke appear to be wiser than they actually are. Friedman also speculated briefly on the likely pattern of inflation in the future.

The second part of the conversation on the issues in Capitalism and Freedom will be available next week. Feel free to subscribe to EconTalk at the iTunes Music Store or wherever fine podcasts are sold (or in this case, released without charge.)

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tw August 28, 2006 at 10:13 am

I enjoyed Part 1 of the interview, especially at the end, where you and Milton discussed how the Fed have actually behaved as robots in following the "rule" of steady growth in money supply. Just how often do we run across irony when economics meets politics and/or public policy?

And I wholly share the concern about government one day printing money without taxation to "solve" its debt problems. It seems to me that the lynchpin of this awful course of action will be Social Security, which, as we know, isn't fully accounted for in our current national debt.

Looking forward to Part 2, Russ!

iceberg August 28, 2006 at 10:43 am

Do any of the Cafe Hayek editors have a professional opinion on the ABCT, especially as espoused by F.A. Hayek?

Bruce Hall August 28, 2006 at 11:56 am

Very enlightening. It's so simple that it seems to violate the rule: "Nothing is ever as simple as it first seems."

Stuart Berman August 30, 2006 at 12:57 am

Great podcast! I can hardly wait for part II so I am ordering the Friedman book Capitalism and Freedom. [Thanks for the link.]

The first part brings up the question about what the feasible solution is to how the Fed operates. The mechanical replacement seems politically unfeasible. This was a nice touch in your recent podcast interview on healthcare in that John Cogan offered a viable solution.

Your podcast is a great example of how technology can deliver tremendous benefit by an exceptional economist interviewing an icon delivered in a highly distributed medium.

Chris Meisenzahl August 31, 2006 at 8:28 am

Great interview, thanks!

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