Milton Friedman Caused The Great Depression

Yes, yes, I know he was only 17 when the market crashed.

But still.

As Friedman pointed out quite accurately, inept (excessively tight) monetary policy caused the downturn to go much deeper and last much longer than it should have. Pretty much everyone will stipulate to that.

And hence–here's his logical non sequitur–government and the Fed are at fault, and should be eradicated.

Wrong. Bad monetary policy was at fault. Good monetary policy–according to Friedman–would have resulted in the recession ending by '31.

All he really demonstrates is that bad government is bad, and good government is good. Hardly a profound insight.

The real irony, though: the Fed kept money tight why? Because they clung to an almost theologically orthodox belief in the value of Friedman's beloved free markets and "creative destruction."

Friedman's belief system is what caused the government ineptitude/failure that he so bemoans.

Update 10/19: In a WSJ interview, Anna Schwartz, Friedman's co-author, says that we should hew to the very "creative destruction" philosophy that justified the inept monetary policy that she and Friedman so effectively disparaged. Because this time it's different. Really.

The dizzying depth of these nested ironies is approaching the level of clinical schizophrenia.





One response to “Milton Friedman Caused The Great Depression”

  1. […] both adopts the facts of Friedman/Schwartz’s Great Contraction narrative, and eviscerates the self-contradictory conclusions that Friedman and Schwartz draw from those […]