Milton Friedman and Restraint

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National Review:

Lovers of Big Government and apologists for debt like Paul Krugman have tried to paint Milton Friedman as a contradiction. They say that Friedman’s insight that more Fed intervention might have mitigated the Great Depression is inconsistent with his view that the Depression would have been less severe without the Fed.

 

Krugman can typically be discounted because his partisanship diminishes his perceptiveness. It is, however, disappointing when National Review joins the fray and publishes opinion claiming that Friedman “would likely have supported a much more aggressive monetary response to our economic downturn.”

 

 

Professor Ivan Pongracic of Hillsdale College explains that Friedman’s insight was that the Fed’s inaction in the Great Depression was in the context of a banking system in which the central bank had monopolized the position of lender of last resort.