United Discontent

Milton Friedman on The Federal Reserve in the First Depression

(this guy is also the god father of trusting the invisible hand)

I’m not an economist, yet, and I don’t prescribe to every consequence of every philosophy but I can employ multiple authors for the same consensus of criticism, this, this is taken from the Nov 20th, 1994 interview with Milton friedman on Brian Lamb’s Booknotes

Brian – “What do you think of the Federal Reserve Board today?”

Milton – “Well, I’ve been long been in favor of abolishing it.  There is no institution in the United States that has such a high public standing and such a poor record of performance.”

Brian – “What did Arthur Burns think of That?”

Milton – “He didn’t like that very much.  But needless to say,  I didn’t hesitate to say it to him.  Look, the Federal Reserve System was established in 1913, started in operation in 194.  It presided over a doubling of prices during World War I, it produced a major collapse in 191, it had a good period from about 1922 to 2, then it undertook actions that led to a recession 929 and 1930, and it converted that recession, by its actions, into the great depression.  The major villain, in the great depression, was in my opinion, unequestionably the Federal Reserve System.  Since that time, it presided over the doubling of prices during world war II, it finances the inflation of the 1970’s, and on the whole, it has a very poor record.  It’s done far more harm than good.”

Brian – “In your lifetime, have you ever had a theory that proved to be wrong?  Do you ever go back and say that I was wrong?”

Milton – “Oh yeah, Sure”

Brian – “What was it?”

Milton – “Well during World War II, when I was at the treasury, I was a keynesian.  That is, I believed that the way to control inflation was by controlling government spending, Only after World War II, when I started to work in the field of money, did I come to a different conclusion.  Now I believe keynes was a great man.  He was a great economist, but I think his theory is wrong.”

Brian – “And his theory basically stated is?”

Milton “Basically stated, the fundamental element of it is, that matters is spending.  And what matters in particular is government spending.  And that government spending must play a major role in guiding society.  He  was a liberal in the 19th century sense.  But he was also a believer, he was also an ElitistAnd he believed there was a group of able, public spirited intellectuals, who should be given charge of society.

– inspiring words, although I must learn more.  It seems that basic 19th century liberalism, french revolutionary rhetoric of freedom empire building, mason principles of basic equality under a guided Heiarchy an animal farm “everyone is equal, but some are better” tie in together.  I’m not surprised Keynes belives in a group in charge of society, what do we think of this?

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