The only commodity we can't save or store is...

time.

The huge damage he has done to institutions cannot be overstated.

His main problem is that he has never taken the inequality of information into account. No "capitalist" system which allows or condones information inequality is such a system. It is an oligarchy.

Take the situation of you and a drug company. Are you in a position to fairly judge information about a drug? Of course not. Similarly with insurance plans. You are at a terrible position, as they hold all the cards, and you have almost none.

Darryl, I'd add electricity to your list:-)

I think compared to the havoc Friedman's acolytes wreaked on Chile the US and UK got off lightly. Chile's stupendous natural resources, small population and the stoic nature of its populace saved the country from much greater damage, the protestations of Thatcher et al notwithstanding.

More generally, Friedman never considered the existence of any market failure. To him they were features, not bugs.

POed Lib:

And that's why even the most ardent capitalist systems recognize insider trading as inherently a crime.

Bob

I say that Milton Friedman didn't know shit because he lived in a dream world where he thought everything should be for sale. His ludicrous concept that education should be like toothpaste or sweaters and that schools should "compete", based on some false economic model ignores the fact that schools don't exist to make money. If they did, they would ration their services, which means many, if not most children, could not receive an education. Same for libraries, fire departments and police. Are they supposed to "compete", too? How about political offices? Should they be for sale too? In the Friedman model, apparently they should be.

I consider Friedman to be a discredited quack, like Leo Strauss, whose selfish, greed-based philosophies have been shown to be abject failures.

As it relates to Friedman's view of inflation - I could give a rip, Kevin. The right-wing bondholders always fear inflation more than unemployment, the bane of the working man.

Disputo:

I remember some of the PBS specials built on his ideas that ran in the late 70s before his ideas become hegemonic. He was in glowing raptures about Asian sweatshops.

I was like ... huh? What's the value of quality of life? Oh, it's *relative* ...

I didn't understand much about politics at the time -- let alone economic theory -- but something seemed deeply deeply evil about all those cheery scenarios of bustling economic activity amid material squalor.

Bob

Clearly a false claim. Many factors can create and sustain inflation, whether or not you're talking about an economy that has widespread facilities for credit.

Just look at pre-modern economies, where monetization is limited. There are many examples of known periods of inflation, which clearly were not caused by or controlable by means of limits upon the money supply.

The Conservative Deflator:

His acolytes and students became neocon assholes, but I think that's a bum rap on Leo Strauss. For the most part, he was a classics professor, and the most neocon-supporting thing he did was, as a refugee from Hitler, critiquing the fact/value distinction. And there's something to be said, after all, for putting a check on a Hegelianism which sees Hitler and Nazism as merely an expression of its time ...

But of course, the critique of moral relativism did indeed found the "moral clarity" school of thought which labels regimes implacably evil and thus ripe for invasion -- and look where that's led us.

But Strauss himself is an interesting political theorist and a champion of liberal democracy who voted Democratic as a US citizen.

Bob

High priest of the Cult of the Invisible Hand dies.
Film at 11.
(I can't wait until this religion starts generating Suicide Bombers - if it hasn't already).

Economists are to Science what Fundamentalists are to Religion. A fucking DISEASE.

As a professed democratic socialist who rejects even the idea of an "invisible hand," let alone its being anywhere close to perfect, I will miss Milton Friedman as an idea-generator not one bit.

As a monetarist eminence grise with deleterious effects on the modern world, I will miss him even less.

Today, no major central bank directly targets money supply data in setting monetary policy.

WTF? What the hell does he think the Fed Funds rate does? That's like saying treasuries (or central banks) no longer particpate in currency markets in (largely useless) efforts to effect exchange rates.

The only reason we haven't heard more about this in the last 10 years is that wages in the aggregate have been in decline, which are primary in fueling inflation.

"
POed Lib:
And that's why even the most ardent capitalist systems recognize insider trading as inherently a crime.
Bob
"

HUH? WTF?
The US only recognized insider trading as a crime after the disaster of the Great Depression. There are plenty in the US who will actively tell you how the US ought to ditch all legislation (at the very least commercial legislation) post-1930 and go back to the glorious days of US capitalism in th 1880's.

I think Britain has insider trading as a crime, but on rather less stringent terms than the US. Maybe some of the other anglo countries (Australia, NZ, Canada, South Africa). As far as I know other than those it is not a crime, not in Asia, not in South America, not in Europe.

If you give The Chicago Boys a chance to do things their way, they'll fuck things up—guaranteed.

As far as I know other than those it is not a crime, not in Asia, not in South America, not in Europe.

As far as I know, you spend half your time dealing with the monkeys flying out of your butt.

Europe could not have functioning markets without Insider Trading laws. 15 secs of google time brought up that the EU (then the EC) issued a Directive requiring all its members to have Insider Trading laws in place by 1992. The Directive was based on UK and French IT law.

I'll leave it for you as a homework exercise to research IT law in Asia and SA.

slightly OT, but my favorite take on this is still fark's:

"Milton Friedman has died. Funeral services will be held as market forces dictate.".

November 17, 2006
We Are Live at Salon, with an Obituary for Milton Friedman
J. Bradford DeLong (2006), "A Man Who Hated Government," Salon (November 16, 2006)

http://preview.tinyurl.com/ycyfkn

For some of DeLong's praises of Milton Friedman, see his 2000 Journal of Economic Perspectives article, "The Triumph of Monetarism?".

Link to original working paper:
http://econ161.berkeley.edu/Econ_Articles/monetarism.html

As for whether all inflation is monetary:
"The Volcker disinflation left few in doubt that central banks had and could rapidly use their powerful levers to control nominal spending."

and

"...under normal circumstances monetary policy *is* a more potent and useful tool for stabilization than it fiscal policy."

I have to say, American Hawk, that is the first post of yours that I really like. Truly humorous...

rmck1 - I can't say that I know a great deal about Leo Strauss, other than he advocated a Manichean good/evil dichotomous view of the human existence, which I think is fundamentally flawed. All human beings have the capacity for good and evil. George W. Bush is not 100% good and Osama bin Laden is not 100% evil. This simple-minded thinking has gotten us into the geopolitical quagmire we find ourselves in. Just like Republicans are not 100% wrong and Democrats are not 100% right. If Leo Strauss voted Democratic, that proves my point.

Peace.

TCD

His ludicrous concept that education should be like toothpaste or sweaters and that schools should "compete", based on some false economic model ignores the fact that schools don't exist to make money.

I think you misstate the problem. Friedman was quite aware that schools don't exist to make money, he simply believed that they would do the job of delivering education better if they did exist to make money.

I think Disputo nails the central problem with Friedman: he refused to recognize market failure.

I have to say, American Hawk, that is the first post of yours that I really like. Truly humorous...

That's because he cribbed it from somewhere else (fark.com).

A couple of points:

Friedman is most certainly right that "inflation is always and everywhere a monetary phenomenon". With the caveat: "in the long run". Trying to base monetary policy with a 12-18 month horizon on money is not going to work, given that money demand is unpredictable. But in the long-run (say the 8-year horizon), money and inflation track each other pretty well.

As for the claim that no central bank targets money, well, the ECB uses a "monetary pillar" to "cross-sheck" its "economic pillar". This arises from the Bundesbank's legacy of placing a huge premium on money. Just last week, a high profile conference in Frankfurt saw the ECB defend the monetary pillar from criticism by Bernanke, Mike Woodford and others. But although inflation-targetting is now in vogue, the jury is still out on it. But ignoring longer-term trends that an analsyis of money or credit could expose, we could be missing some key inflation or deflation possibilities, especially in the realm of booming asset prices. Bringing it closer to home: did Greenspan err in ignoring the housing bubble? Inflation targeters say no, "monetarists" say yes. So the debate is far from arcane, it's quite topical.

Finally, Milton Friedman's greatest claims to fame were his notions of permanent consumption and the expectations-augmented Phillips Curve (the latter alongside Ned Phelps, who won the Nobel this year). While these ideas don't have any eye-catching interest to journalists, they are far more important in economics that yet enother tired old "Keynesian versus monetarist" analysis. Yawn.

Ahhhh!

This is off topic but did anyone know that Josh Marshall is a new dad?

I didn't until just now, that is, when I visited his website.

And a word about children, I mean, who in their right mind would send their child off to Bush's Vietnam II war? This war is NOT about WMD, or even fighting terrorist over there, you know, the terrorist the Bush created just to be able to say that to public.

So that after walking ones infant half the night due to colic, after helping your child study and keep up with school, teaching your child about life, vacationing with your child, investing in braces for your child's teeth and maybe even college for their future, WHY THE HELL WOULD ANYONE SEND A CHILD TO DIE IN A WAR THAT DOES NOT INVOLVE A DIRECT US THREAT? BEATS ME?

Okay, perhaps Darfur might be a good reason but only if your child is personally committed to helping someone out of a nation “cleansing” holocaust because it is their dream to help other, the way Pat Tillman did, but anything else, especially with Bush hiding the coffins, and the horrible way Bush indeed try even to hiding the war in Iraq. Bush’s war in Iraq is using soldiers as if they are nothing more the toilet paper.

When it became clear that Bush/Cheney outright lied about WMD, and Bush/Cheney clearly cooked the intelligence and evidence of war in Iraq, I’m surprised that most parents, wives, and husbands don’t want Bush prosecuted for such an incredible lie. Soldiers in Iraq are not dying for Iraqi freedom, as Iraqis don't want the US military there anyway, nope, our soldiers are dying because Bush/Cheney lied and cooked intelligence about the war in Iraq and RIGHT NOW, our soldiers are dying merely to save Bush/Cheney’s political point of view, and yeah, and Kissinger’s old Vietnam view too.

POed Lib: His main problem is that he has never taken the inequality of information into account.

Fortunately other economists, like Joseph Stiglitz and Kenneth Arrow have done work on information asymmetry in economics.

Just found out that as early as 1963 Arrow wrote a paper called "Uncertainty and the Welfare Economics of Medical Care".

Anybody who just spouts the "markets uber alles" line these days is a simpleton.

PowerLineBlog has a post entitled Remebering Milton Friedman. Several good links. More substance than Kevin Drum's lightweight "opinions differ" post here.

Just now on Washington Journal, Micheal Duffy goes into Whitehouse damage control. Duffy says this about Abizaid comments:

Abizaid added that, even if it were in Iraq's best interest to increase the presence of U.S.

Translation, at least to Duffy of TIME magazine is simply Duffy's attempt at Whitehouse damage control, Duffy sez.. Abizaid didn't want to increase troops BECAUSE the Iraqs don't want more US military members in Iraq.

Michael Duffy should join the Judith Miller Hall of Infamy or is it the Hall of Journalist Wannabe's that don't how to practice impartial treatment of news.

Abizaid never said any such thing, in fact, I'm sure Abizaid would jump at the chance of extra troops in Iraq but there simply IS NO EXTRA military troops to be had and Abizaid actually did say there was a shortage.

I guess nobody can call you a liberal magazine if indeed your magazine come to the rescue of Bush administration by letting Americans know what Abizaid REALLY intended to say, instead of what he actually did say.

Bush is a JEW.

How many folk think that the Jews censoring the 30 or so pictures of GW Bush, and cohorts, having fun with rabbis, etc, in the article:

Bush is a Jew.

are evidence that Jews are embarrassed by their great leader Bush, being a Jew.

Why do you think the Jews had to shutdown the entire site http://linux.coconia.net?

Were Jews embarrassed by their great leader Bush, wearing a Yarmulke (skullcap), while praying at the Wailing Wall, or were Jews embarrassed by the pictures of Putin wearing a skullcap, or Jeb Bush dancing with Rabbis,... or of John Howard, or what?

PowerLineBlog has a post entitled Remebering Milton Friedman. Several good links. More substance than Kevin Drum's lightweight "opinions differ" post here. Posted by: Frequency Kenneth

LOL.

What do you get when you mix LGF and the National Review online? PowerLine - wingnut posts that aren't all in capitals and/or bold, fewer Cheetos stained Spiderman PJs, and a less spittle flecked monitor.

Morning Minion wrote 'Friedman is most certainly right that "inflation is always and everywhere a monetary phenomenon". With the caveat: "in the long run".'

Then why did the Great Inflation of the 16th century happen before the influx of silver from the New World ?

It's old, but Earl Hamilton's work is where you still start on this question.

Ian Whitchurch

DeLong emphasized the MF quote: "To spend is to tax."

"a Directive requiring all its members to have Insider Trading laws in place by 1992. The Directive was based on UK and French IT law."

So Europe did not have functioning capital markets until 1992?

Let's see. UK law says "
It is not illegal to fail to trade based on inside information (whereas without the inside information the trade would have taken place), since from a practical point of view this is too difficult to enforce. It is often legal to deal ahead of a takeover bid, where a party deliberately buys shares in a company in the knowledge that it will be launching a takeover bid.
"
(http://en.wikipedia.org/wiki/Insider_trading)
which is not a particularly strong vote against insider trading.

We have a followup from the same source of
"
The "Objectives and Principles of Securities Regulation" [5] published by the International Organization of Securities Commissions (IOSCO) in 1998 and updated in 2003 states that the three objectives of good securities market regulation are (1) investor protection, (2) ensuring that markets are fair, efficient and transparent, and (3) reducing systemic risk. The discussion of these "Core Principles" state that "investor protection" in this context means "Investors should be protected from misleading, manipulative or fraudulent practices, including insider trading, front running or trading ahead of customers and the misuse of client assets." More than 85 percent of the world's securities and commodities market regulators are members of IOSCO and have signed on to these Core Principles.
"

So we have, in 2003(!!!) 85% of the world's market regulators in principle agreeing with the idea of insider trading being illegal, but, in practice, like Britain, with a pretty lax attitude as to both what counts as insider trading, and whether to enforce.

My essential point was that the claim "even the most ardent capitalist systems recognize insider trading as inherently a crime" is quite ridiculous, having nothing to do with either historical or geographical reality. Do you seriously want to claim that the US was not a capitalist society until the mid-30s, that Europe only signed on in 1992, that Japan only joined in 1988, that Taiwan only joined on May 30 2006 and so on?
Hong Kong, probably the most "ardent capitalist system" in modern history, and, relevant to the discussion, beloved of Milton Friedman, never had an insider trading law until 1997.

"Bush is a JEW. [etc etc etc]"

I agree. For more information on the dangers of the Jewish conspiracy, I recommend viewing the movie _Borat_ which shows in detail how fiendish these people are.
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not

Maynard Handley -- Did you see the photos of the great leader Bush, wearing a Yarmulke (skullcap), while praying at the Wailing Wall, or of Putin wearing a skullcap, or Jeb Bush dancing with Rabbis,... or of John Howard.

Tell us what you concluded.

I thought Milton's other famous quote was something about how efficient armies would be if they were privatized.

What a damaging idiot he was.

So, who is/are the predominant economist(s) of today, Libertarian, Conservative, Moderate, Liberal or other?

What is the primary idea he/she is noted for?

Where does that lead us in terms of national or world economics?

Here in Canada, newspapers were much more, um, restrained in evaluating Friedman. This is from today's GLOABE AND MAIL:

John Crow should have been Canada's leading disciple of Milton Friedman.Canada's top central banker from 1987 to 1994 clearly believed in the power of monetary policy to make or break a country's fortunes....

But even Mr. Crow found that real life can't always be forced perfectly into economic theory -- not even the solid and high-profile theories developed by Mr. Friedman.

"The Bank gave it a college try, it really did," Mr. Crow said yesterday. "It just doesn't work that way."

In a nutshell, Mr. Friedman thought that central banks should manipulate the country's money supply in order to push down inflation and foster a stable economic environment for businesses.

Today, only the second part of this idea holds sway -- the belief that central banks should keep inflation low and stable, and allow markets to fluctuate as freely as possible. But the first part of the idea, targeting the money supply, has not stood the test of time. Mr. Crow, like other economic thinkers, has concluded that Mr. Friedman was half right.

The Bank of Canada's experimentation with implementing Mr. Friedman's ideas goes back several decades. Former bank governor Gordon Thiessen pointed out in a 2000 speech that Mr. Friedman was instrumental in Canada adopting a floating exchange rate in the 1950s.

Mr. Friedman argued with Canadian central bankers back in 1948 that the country's fixed exchange rate was a losing proposition.

By the 1960s, Mr. Friedman's theories about business cycles, inflation, the role of central banks and the value of the individual had taken off. His Chicago School of economic thought, as it is now known, took root.

But it didn't really gain a foothold in Canadian economic policy until the late 1980s. Indeed, when then-prime minister Pierre Trudeau spoke about addressing Canada's inflation problems during the 1970s, he didn't even mention monetary policy, recalls economic historian David Laidler at the C.D. Howe Institute. By the 1980s, with inflation and interest rates soaring, Canada was more receptive. Central banker Gerald Bouey was looking for ways to stabilize prices. Mr. Friedman's theory -- that a central bank can dampen inflation by limiting the supply of money in the economy -- was appealing.

The money supply, however, turned out to be far too dynamic for any central bank to contain. The Bank of Canada tied itself in knots trying to define and keep track of the ever-expanding supply of money, Mr. Crow said.

In the end, the sophistication of financial markets outstripped the bank's efforts.Unlike in the 1960s and 1970s, the markets are now characterized by high-speed, global trading of complicated derivatives and debt instruments....

The concept of Canada's central bank focusing solely on low and stable inflation to create a vibrant business and investment environment is a core value of the Bank of Canada to this day. Indeed, it has become the conventional wisdom of monetary policy around the world.

Mr. Friedman's influence in Canada, however, has always run parallel to the equally influential ideas of his rival, Canadian-born economist John Kenneth Galbraith...

Where Mr. Friedman espoused views often seen as libertarian, Mr. Galbraith argued for government intervention to soften the painful edge of capitalism. What Mr. Friedman was to Canadian monetary policy, Mr. Galbraith was to fiscal policy.
When Canada gave the economist a try
Mixed legacy for Friedman's ideas

HEATHER SCOFFIELD

ECONOMICS REPORTER

John Crow should have been Canada's leading disciple of Milton Friedman.

Canada's top central banker from 1987 to 1994 clearly believed in the power of monetary policy to make or break a country's fortunes. And he hated inflation as much as the Nobel-prize-winning Mr. Friedman, who died yesterday at age 94.

But even Mr. Crow found that real life can't always be forced perfectly into economic theory -- not even the solid and high-profile theories developed by Mr. Friedman.

"The Bank gave it a college try, it really did," Mr. Crow said yesterday. "It just doesn't work that way."
Print Edition - Section Front

Section B Front Enlarge Image
The Globe and Mail

In a nutshell, Mr. Friedman thought that central banks should manipulate the country's money supply in order to push down inflation and foster a stable economic environment for businesses.

Today, only the second part of this idea holds sway -- the belief that central banks should keep inflation low and stable, and allow markets to fluctuate as freely as possible. But the first part of the idea, targeting the money supply, has not stood the test of time. Mr. Crow, like other economic thinkers, has concluded that Mr. Friedman was half right.

The Bank of Canada's experimentation with implementing Mr. Friedman's ideas goes back several decades. Former bank governor Gordon Thiessen pointed out in a 2000 speech that Mr. Friedman was instrumental in Canada adopting a floating exchange rate in the 1950s.

Mr. Friedman argued with Canadian central bankers back in 1948 that the country's fixed exchange rate was a losing proposition.

By the 1960s, Mr. Friedman's theories about business cycles, inflation, the role of central banks and the value of the individual had taken off. His Chicago School of economic thought, as it is now known, took root.

But it didn't really gain a foothold in Canadian economic policy until the late 1980s.

Indeed, when then-prime minister Pierre Trudeau spoke about addressing Canada's inflation problems during the 1970s, he didn't even mention monetary policy, recalls economic historian David Laidler at the C.D. Howe Institute.

By the 1980s, with inflation and interest rates soaring, Canada was more receptive. Central banker Gerald Bouey was looking for ways to stabilize prices, Mr. Crow recalls. He wanted an "anchor" for monetary policy -- a clear target that could be easily monitored and publicized.

Mr. Friedman's theory -- that a central bank can dampen inflation by limiting the supply of money in the economy -- was appealing. The money supply, however, turned out to be far too dynamic for any central bank to contain. The Bank of Canada tied itself in knots trying to define and keep track of the ever-expanding supply of money, Mr. Crow said.

In the end, the sophistication of financial markets outstripped the bank's efforts.

Unlike in the 1960s and 1970s, the markets are now characterized by high-speed, global trading of complicated derivatives and debt instruments. Something as seemingly simple as the widespread use of credit cards has confounded attempts to measure the money supply.

"It didn't work well, because M1 [a narrow definition of the amount of money in the economy] turned out to be unreliable," Mr. Crow said.

He did not, however, abandon Mr. Friedman's theories wholesale. The governor argued strongly, and controversially, that monetary policy should be directed at price stability. He would use interest rates, rather than money supply, to manage inflation expectations.

"It turned out to be startling to people in Canada," he recalls, referring back to a speech he made in 1988. "It was something that struck people as being too monetarist."

Mr. Crow was widely vilified for the economic pain caused by his strict focus on keeping prices stable.

But his policy on inflation targeting was a turning point for Canadian monetary policy and for Canadian capital markets.

The concept of Canada's central bank focusing solely on low and stable inflation to create a vibrant business and investment environment is a core value of the Bank of Canada to this day.

Indeed, it has become the conventional wisdom of monetary policy around the world.

Mr. Friedman's influence in Canada, however, has always run parallel to the equally influential ideas of his rival, Canadian-born economist John Kenneth Galbraith -- the man who coined the phrase "conventional wisdom" and spent his lengthy career fighting it.

Mr. Galbraith died in April at age 97.

Where Mr. Friedman espoused views often seen as libertarian, Mr. Galbraith argued for government intervention to soften the painful edge of capitalism. What Mr. Friedman was to Canadian monetary policy, Mr. Galbraith was to fiscal policy.

Maynard Handley -- Did you see the photos of the great leader Bush, wearing a Yarmulke (skullcap), while praying at the Wailing Wall, or of Putin wearing a skullcap, or Jeb Bush dancing with Rabbis,... or of John Howard.

Please. Tell us what you concluded.

cmdicely:

I don't think that market failure is the only problem with Friedman's economic theories. He presumes (falsely) that individuals in a market economy always make rational decisions or that they always act in their own best self-interest. Friedman obviously never raised a teenager. He also didn't quantify the extent to which emotions cause people to make irrational decisions - like voting for Republicans just because they claim to be "pro-life", while doing all kinds of things that are in fact, pro-death.

craigie:

You nailed it. Friedman's idea of an all-volunteer (read, mercenary) army is antithetical to the intent of the Founding Fathers [see Federalist Paper No. 24, for example], who feared a standing army. They recognized that a conscripted military was a check against an American tyrant and that only by reserving the power to bring together state militias under a Commander-In-Chief, could liberty be preserved. In fact, that is the reason for the Second Amendment. The right to bear arms is only meaningful within the context of state militias. Conservatives love to ignore the 2nd Amendment's introductory clause. But I digress - Friedman was full of shit when it comes to a volunteer army. History has shown that mercenaries commit more atrocities, such as torture and slaughter of innocents, than a conscripted army. Sound familiar???

Maynard Handley -- Did you see the photos of the great leader Bush, wearing a Yarmulke (skullcap), while praying at the Wailing Wall, or of Putin wearing a skullcap, or Jeb Bush dancing with Rabbis,... or of John Howard.

Please. Tell us what you concluded.

Sorry for the repeat. Some posting problem.

frequency kenneth made more sense when he was less frequent

Extradite Rumsfeld said: “I can't wait until this religion starts generating Suicide Bombers - if it hasn't already”

They have. They're called Enron.

Sorry for the repeat. Some posting problem.

You mean this creepy anti-Jew stuff you've been putting up here REPEATEDLY since about July is a posting problem?

And you're sorry?

Does this mean it's going to stop now?

Tony Blair has publicly accepted that the violence in Iraq since the US-led invasion in 2003 has been a disaster.

http://news.bbc.co.uk/2/hi/uk_news/politics/6160466.stm

Milton Friedman is an "idiot" and "worthless"? Why bother to post such drivel in the comments if you don't even understand his work. Friedman
a) ended the ridiculous belief that fiscal policy was more effective than monetary
b) helped central bankers realize that expectations matter and thus pulled us out of stagflation
c) was a driving force in ending the draft
d) and the Earned Income Tax Credit
e) and the London Congestion Charge
f) did much of the early work on consumption smoothing models that help drive every decent
macro forecast today
g) proposed the idea of school vouchers
h) helped set the economic stage for Chile's growth (both during AND after Allende), leading Chile to have S. America's best economy today
i) helped convince China to marketize its economy, leading to the greatest transition out of poverty in human history

There are few men, and fewer economists, who can claim such a legacy. And indeed, many of the ideas above are now more associated with the left than the right. Milton was no ideologue.

As for monetarism, it's true that banks target the interest rate (in general) rather than the money supply these days; he was right when he proposed his theory, and in the long run inflation HAS to equal money supply growth (otherwise you can get growth for free), but the increasing complexity of derivatives has made even calculating the MS a challenge.

As a liberal economist who has often disagreed with Uncle Miltie but actually had the pleasure of letting him comment gently on my not so gentle critique of a presentation as I admired his (at age 70) almost high school like love affair with his wife (a few weeks when I got the pleasure of dining with their very interesting "non-economist" son), let me suggest those who praise Milton Friedman with the usual monetarist soundbites (see Angrybear just now) these folks are totally missing the point. Milton Friedman pushed the boundaries of my profession in ways that those of us who often disagree with him - just sat back and admired.

Actually, Friedman didn't presume that individuals were completely rational in their economic behaviour & consumption. In fact the first reason cited for the Nobel Prize Friedman received in 1976 was his development of the "permanent income hypothesis." This is the contention that most people adjust their consumption/spending NOT in response to changes in their actual current income, but to reflect what they expect will be their lifetime income. Consumption based on future expectations rather than present income ranges from irrationally "counting one's chickens before they're hatched" to quasi-rational, high-risk speculation/investment. The "permanent income hypothesis" actually helped to explain why people (& governments) so often & irrationally fail to live within their means.

Monetarism itself, the idea most associated with Friedman's name was a brief global fad & is now discredited. Few, if any, economists would allow themselves to be called monetarists nowadays. Nonetheless, Friedman & his followers have changed the way modern economies are managed. He was right in arguing that controlling inflation was the key to managing the economy & reducing unemeployment. Friedman was also right in elevating monetary policy ( by manipulating interest rates) over fiscal policy (budgetary changes in tax & govt. spending) as the most effective instrument for managing demand. He was also right in emphasising the important role played by people's (frequently irrational) expectations about inflation. It's woth noting though that these days most central banks target the inflation rate, not the money supply. And rather than seeking to control the quantity of money, they control the price of money through interest rates.

....But Strauss himself is an interesting political theorist and a champion of liberal democracy.... rmck1 at 6:58 PM

...They argued that Strauss's idea of hidden meaning, "alerts one to the possibility that political life may be closely linked to deception. Indeed, it suggests that deception is the norm in political life, and the hope, to say nothing of the expectation, of establishing a politics that can dispense with it is the exception...."

This claim of esoteric knowledge known only to acolytes mean that it is perfectly reasonable and ethical to lie to the hoi polloi in service to a greater good.

...According to Drury, Strauss had a "huge contempt" for secular democracy. Nazism, he believed, was a nihilistic reaction to the irreligious and liberal nature of the Weimar Republic. Among other neoconservatives, Irving Kristol has long argued for a much greater role for religion in the public sphere, even suggesting that the Founding Fathers of the American Republic made a major mistake by insisting on the separation of church and state. And why? Because Strauss viewed religion as absolutely essential in order to impose moral law on the masses who otherwise would be out of control....
Here is another good article Analyzing Leo Strauss

I liked this article on Milton Friedman
...Although Friedman claimed some years ago that "my central theme in public advocacy has been the promotion of human freedom," his economic theories led him to support some of the most brutal economic and social transformations of the late 20th century. In particular, Friedman's "neoliberal" perspectives were adopted by the Chilean military junta that overthrew the democratically-elected Salvador Allende in 1973. While Friedman claimed not to have endorsed the coup or Augusto Pinochet's subsequent and abominable rule, in 1975 he made a pilgrimage to Chile and delivered a series of lectures endorsing precisely the sorts of economic "reforms" that Pinochet's Friedmanesque advisers -- the so-called "Chicago Boys" -- had undertaken, including the abolition of the minimum wage, the suspension of labor union rights, the privatization of the state pension system and its industrial base (with the exception of the copper mines, which funded the regime's grotesque military apparatus). Chile's economic fate under the Pinochet, described by Friedman as "miraculous," was catastrophic from 1973 through the mid-1980s, as the national debt soared, income disparities widened, industrial growth slowed to a crawl, and unemployment reached as high as 43%. Meantime, spending on health care crumbled, as cases of hepatitis, diabetes and typhus rippled across the country. Santiago assumed an ignominious position as one of the most polluted cities in the world, as the free market evidently demanded it must....
There was a clip showing Friedman earnestly insisting that government programs cannot "create" jobs because the tax money comes from others who, by some mysterious means, create the same number of jobs. This flies in the face of empirical evidence. I think his ""permanent income hypothesis" is largely bunk as well.

"I can't say that I know a great deal about Leo Strauss, other than he advocated a Manichean good/evil dichotomous view of the human existence, which I think is fundamentally flawed."

Neither of you seem to know anything at all about what makes Straussianism what it is. But Mike is helping you out. But the key idea is his esoterica with regard to political philosophy and the implications of this aren't pretty.

So I think you're correct in your excoriation, but your first comment struck me very much as an example of knownothingness. For many purposes it may be sufficient to merely know the identity of one's ideological enemies, but when you began to characterize the essentials of their beliefs as part of civil discourse, you have a responsibility to actually know something on the topic.

The story is that inflation was cured by raising interest rates. Given inflation is caused by loose money, this may seem a logical solution. The problem is that inflation is a greater supply of money then demand for it and the only ways to cure an oversupply are to decrease supply, or increase demand. Raising interest rates decreased supply, but by causing a recession, it also decreased demand. How inflation was brought under control was through government borrowing. Not only did this increase demand in itself, but government spending tends to increase private sector investment, thus multiplying the effect. Consider that one of the ways the government puts more money into circulation is to buy up its own debt. So selling debt would obviously have the opposite effect of decreasing the money supply.
Today, the rich are getting richer and the government is borrowing enormous amounts of money. Only as much money can be saved as can be effectively invested, beyond which it only creates inflation of assets. (Of course there is the pari-mutual wagering of the derivatives market, but that will only be fuel on the eventual fire.) So consider where all this money the government is borrowing would go, if it wasn't being recycled through the public sector.

I wish the Reaganite Republicans and their camp followers had paid heed to:

"Remember, to spend is to tax." - Milton Freidman

Yeah. Those vast deficits. The seas of red ink.

a) ended the ridiculous belief that fiscal policy was more effective than monetary

What's so ridiculous about this? Just two and three years ago, the Fed was openly worrying about the prospect of deflation, and saying they weren't sure what to do about it. After all, it had stumped Japan's central bank. The Fed has tools to fight inflation, but fiscal policy is the way to get out of deflation.

'For many purposes it may be sufficient to merely know the identity of one's ideological enemies, but when you began to characterize the essentials of their beliefs as part of civil discourse, you have a responsibility to actually know something on the topic.'
--Keith Ellis

Why, Keith? Lack of knowledge has never stopped George W. Bush from running his damn fool mouth!

Just two and three years ago, the Fed was openly worrying about the prospect of deflation, and saying they weren't sure what to do about it. After all, it had stumped Japan's central bank. The Fed has tools to fight inflation, but fiscal policy is the way to get out of deflation.

The Fed always knew what to do the question was only over how much to do. That's why we had a 1% Fed Funds rate.

There's no comparision between the US Fed and it's Japanese counterpart. They operate in two very different worlds with much different degrees of openness and independence. The Japanese deflation was caused by their central bank as was their almost decade long recession. Our Fed dealt with the banking crises of the early 90's while the Japanese never did. Their govt simply had too large a role in economic affairs and political bureaucrats always screw it up.

The health of the economy relies on both fiscal and monetary policy. The USA has been blessed with open markets, an independent Fed and the very competent leadership of Volckner and Greenspan. A strong and stable currency is not the only requirement for prosperity. The USA is so much more prosperous than Europe because it also has far more economic freedom and lower taxes. Europe has killed innovation and growth via high taxes and far too much Govt. It's utterly shocking how dymanic the USA economy is versus Europe.

The Laissez-faire thing was always a fraud anyway for several reasons, aside from whether we should be compassionate per se. Just one basic point: the economy, *before* formal "interference* in the form of explicit regulations, isn't really free or natural anyway. Look at how the Fed manipulates interest rates and the money supply and thus job prospects, the wealth of investors, etc. (That "new money" cannot be made by market trading of a hard currency for goods/services - the governmet/private Fed has to "put it in by hand" in an ulitmately "political" way that must be allocated to "winners" of some stripe....) Then there is the favor of legal personhood and limited liability granted to corporations: that should not be granted with no string attached.

All of the above and more, are reasons why the government owes a social welfare system. (Just consider that those affected by its interest rate policies deserve compensation in some sense just as surely as anyone displaced by the flooding caused by a Federal dam....) But the conservative intellectuals almost always evade this issue and cover up the implications....

PS- rdw: the US has structural advantages such as lower population per its resources and land area, political power - so far -, etc. Also, the current "great economy" is a fraudulently presented average condition that ignores what most people are actually getting out of it - a refinement of just the sort I would expect your kind to ignore or obfuscate...

Tyrannogenius

Mmmm... let's see now...

First, no country tries to manage inflation through fiscal policy. It's true that monetary policy is managed through inflation targeting rather than direct targeting of a monetary aggregate, but the fact that it's central bankers who are charged with controlling inflation is ample vindication of Friedman's key insight.

Second, unless you think that ten years of deficit spending that would make Bush & Co. blush (think bridges to nowhere in the hundreds or thousands) was finally able to cure the Japanese deflation, it's simply not true that fiscal policy is the tool to end deflation. The Japanese deflation ended when Japanese banks finally worked through a mountain of bad loans to zombie companies and were able to increase lending again.

Third, the fact that someone else lives his life in a way I wouldn't isn't evidence that he's irrational. It's revealing that Conservative Deflator uses the example of a teenager to illustrate his point. Evidently he believes the rest of us are children who need to be led by wise people such as, well, him.

Finally (all the true believers here are breathing a sigh of relief), it's simply not true that Friedman denied the existence of externalities. I suspect he thought there were fewer of them than some others do (the fact that the market doesn't lead to your preferred outcome isn't in and of itself evidence of a market failure), and believed that some alleged market failures are the result of government action rather than evidence of the need for more government. And his prescription for market failure likely would be different than some others, using market forces where possible.

As an example, given there were too many cars in Central London, one could just assert that only so many cars will be allowed into the area in the morning, or hand out free permits for entry up to the desired number, or charge cars for entry and just change the charge until the desired number of cars is reached. The first would result in lines of cars just outside the central area every morning as people tried to be one of the lucky ones, pushing the congestion outward a bit and increasing fuel usage and pollution. The second would result in lines of people every month, and would be an open invitation to cronyism and corruption. The third, which is what was chosen by Old Labour Mayor Ken Livingstone (no fan of Blair), has actually reduced congestion by allowing people to decide for themselves whether it's worth it to pay the charge on a particular day.

Okay, that's enough for this libertarian for one morning. Have at it...

I never understood why Friedman considered the quantity theory of money to be the belly button of the universe. I agree with Paul Krugman and Brad DeLong (who tend to know what they are talking about) that monetarism was actually a very minor aspect of Friedman's contribution to economics.

He was brilliant (it is strange and painful to use the past tense). His contributions include the accelerationist critque of the Phillips curve (independently made by Phelps who just won a nobel prize for that), the permanent income hypothesis, the description of what a "peso problem" is, the serious observation of the need to look at prices which are actually paid not list prices etc etc etc.

He was often brilliant. He obtained his god-like status for some economist (and demonic mystique to the others) because he bet his reputation on a hotly contested prediction again and again and again and won each time. Might have been a long long string of luck, but, personally I doubt it.

Friedman was three things, an economist who was strangely brilliant (or maybe he sold his soul to the devil), a monetarist fanatic with a fetish for MV=pY, and a libertarian pro-market extremist out there with Hayek and Rand. I see these three Friedman's as separate (I want to admire the first and ignore the other two).

Friedman saw a connection. The only one I see is that he reliably opposed a Keynsian consensus which I don't even remember. He is so influential that, in the UK, "monetarist" is used to mean "pro-market" or maybe "indifferent to the needs of the poor."

In any case he was a genius.

'Whether they are aware of it or not every liberal is a closet socialist and yearns for a country where the state owns the means of production.'
--mhr

Yeah, right, mhr. You are so frigging brilliant. There is an expression for people who believe they know what people are thinking and yearning for - mentally ill.

Milton Freidman often said we need low taxes and small government, yet his work in pricing theory actually disproved that this combination exists. Even a minimal understanding of supply and demand tells us that low (and flat) taxes always results in unlimited growth of government until war of revolution results. Flat and low taxes are the Royalist scheme, the Stalinist big government scheme.

I have publically called him a liar for this many times, and he never responded. So, I think he is a dead liar, and he always was, secretly, a big government conservative, not a libertarian by any means.

Insider trading always used to be legal in Japan, I think (shock me that this is the case with the crony capitalism of the LDP); I know Japan didn't tax capital gains at all like we did, and was always the Friedmanians' shining light.

Lest We Forget...Friedman's love of Pinochet and "The Miracle Of Chile".

Palast-1998
In 1970, 20% of Chile’s population lived in poverty. By 1990, the year “President” Pinochet left office, the number of destitute had doubled to 40%. Quite a miracle.

Pinochet did not destroy Chile’s economy all alone. It took nine years of hard work by the most brilliant minds in world academia, a gaggle of Milton Friedman’s trainees, the Chicago Boys. Under the spell of their theories, the General abolished the minimum wage, outlawed trade union bargaining rights, privatised the pension system, abolished all taxes on wealth and on business profits, slashed public employment, privatised 212 state industries and 66 banks and ran a fiscal surplus.

Freed of the dead hand of bureaucracy, taxes and union rules, the country took a giant leap forward … into bankruptcy and depression. After nine years of economics Chicago style, Chile’s industry keeled over and died. In 1982 and 1983, GDP dropped 19%. The free-market experiment was kaput, the test tubes shattered. Blood and glass littered the laboratory floor. Yet, with remarkable chutzpa, the mad scientists of Chicago declared success. In the US, President Ronald Reagan’s State Department issued a report concluding, “Chile is a casebook study in sound economic management.” Milton Friedman himself coined the phrase, “The Miracle of Chile.” Friedman’s sidekick, economist Art Laffer, preened that Pinochet’s Chile was, “a showcase of what supply-side economics can do.”

Also, the current "great economy" is a fraudulently presented average condition that ignores what most people are actually getting out of it

Not at all. It is a great economy and it is great because there are few guaranteed results as in the socialist world and/or the highly regulated world of Westrn Europe. The USA is along among the large developed economies to also be a high growth, high innovation economy. Not even the most delusional fan of Europe would desctibe the continent as innovative. The amount of wealth generated in the USA is staggering as is our consumer spending. We live better than the kings of 100 years ago.

Are all people rich? No. Do all people have opportunity? Yes. That's why we're the worlds ultimate destination. America works and it works better than anywhere else.

Some of the posts here on this thread are as confusing as Friedman.

I’m no economist, but I can’t exaggerate how unconvincing he was, along with Ronald Reagan, standing beside a big money printing apparatus on TV, telling me that that, and only that, was what caused inflation.

He had the gall to do that in the late 1970s after while inflation was running rampant. Trouble was, even an amateur like myself couldn’t help but notice that the price of an imported barrel of oil had increased by a factor of about 10 over a short 6-year period, and just could have had an impact on inflation.

I was supposed to believe the genius economist as opposed to my lying eyes.

Counterpunch has an interesting article re. Friedman and Chile at

http://www.counterpunch.org/grandin11172006.html

But it goes a little looney in trying to link this to recent developments in the US.

A neat thing re. the Counterpunch article is the stuff on Hayek, quoting him as favouring a "liberal dictatorship".

Maybe Hayek and Strauss just saw the old German and Austro-Hungarian empires as a lost Golden Age and allowed this nostalgia to shape their economic and political views.

The first former Iron Curtain country to cut its taxes was Estonia in 1994, led by Prime Minister Mart Laar, who claimed then the only economics book he’d ever read was Milton Friedman’s “Free to Choose.” Estonia established a flat rate on personal incomes of 26%; two years earlier it had abolished all import tariffs. Estonia grew.

After Estonia, flat-tax regimes coursed across Eastern Europe, as listed below (bear in mind that the top rate in the U.S. is 35%): Lithuania, 33%; Latvia, 25%; Slovakia, 19% (the former sad sack of the region, Slovakia’s growing economy has become its envy); Romania, 16%; Ukraine, 13%; Russia, 13%; and Georgia, 12%.

Yes, payroll taxes are often high, but unlike here, the political impulse is to reduce the tax burden; Estonia hopes to get its flat rate down to 20% by decade’s end. Even the World Bank has noticed. In a September report on business reforms, it noted that the second most popular global reform the past few years, after easing regulations on new businesses, was “reducing tax rates and the administrative hassle of paying taxes.” Bosnia-Herzegovina, emerging from the Balkan wars, has cut property taxes.

The accounting firm KPMG’s annual corporate-tax survey, released this month, took special note of the history of corporate tax rates. The downward trend here was begun in 1985 with a corporate-rate cut in the U.K. by Reagan admirer Margaret Thatcher. “In the past 14 years,” the report says, “the average corporate tax rate of countries surveyed by KPMG declined nearly 29%, dropping from an average of 38% to 27.1%.” When Austria cuts its corporate rate to 25% from 34% and German companies started rolling across the border, German Finance Minister Peer Steinbruck accused the Austrians—I love this phrase—of “fiscal dumping.”

*******************************************

The reality is of course the low tax world out-performs the high tax world by every measure and as the USA has demonstrated versus Europe the gap can be quite dramatic. Unfortunately for Old Europe that gap is widening as an accelerated pace.

but I can’t exaggerate how unconvincing he was, along with Ronald Reagan, standing beside a big money printing apparatus on TV, telling me that that, and only that, was what caused inflation.

Actually that's not all he said but it hardly matters. What matters is Reagan and Freidman did what Carter and Galbraith could not do. Reagan broke the back of inflation by raising interest rates to constrain the money supply while simultaneously stimulating economic growth by collapsing marginal tax rates.

Reagan destroyed Keynsian economics and reinstated classical economics using supply-side theory. Our economic dominance over Europe can be traced to 1981 and the fabulous 25-yr period of massive wealth creation that has followed. USA GDP will grow by $450B in 2006. It won't grow by $30B in France and Germany. You think they hate us now? Wait until 2020 when our per capita GDP is double theirs.

This is why Reagan is top-10 President and Carter is bottom 10. 1981 was Morning in America. It's been that way ever since.

Trouble was, even an amateur like myself couldn’t help but notice that the price of an imported barrel of oil had increased by a factor of about 10 over a short 6-year period, and just could have had an impact on inflation.

Oil was a factor but was hardly driving inflation. Core inflation which excludes Oil was also rising at double-digit rates and as we can see from our own recent experience inflation had remained tame despite $70 oil. In fact is we are likely to see a nice slowdown in inflation as energy supplies continue to increase faster than demand for the next several years and more credible alternatives such as Nuclear Power become more prevalent.

Look for Congress to approve a trade deal with India very soon that is designed to allow the USA provide the fuel needed for a massive expansion of Nuclear construction in India. Also look for dramatic increases in ethanol production in the USA. This won't lower carbon emissions (the 40% lower car emissions is offset by the 50% increase in emissions during production) but it will lower demand for imports as much as 5% by 2012.

GWBs energy bill was wise to minimize Govt handouts and let the markets allocate investment. The result is supply is surging and demand is slowing. The market works. Prices settled to the lowest level in 18 months on Friday and rumors are circulating of a 2nd production cut from OPEC. Their excess production will soon approach 15%. Hardly the sign of shortages.

Wooten, you ignornant slut - You have done it again - Paul Volcker was responsible for stopping stagflation from 81 until 83 - He curtailed the money supply - Not fucking with interest rates, you stupid twit.

Volcker came to power under Jimmy Carter and stayed on with Reagan until 87 - You don't hear that Bush has raised the interest rates, do you? No, you hear it as properly called - Greenspan is in charge at the Fed - The same as Volcker was - What the fuck were you doing in the early 80s, falling off telephone poles for Verizon? No, we do not hear you now!

You lost many elections across the land last week because of your insipid economic policies - You and your ilk are losers.

Saturday, November 11, 2006
Israel to produce synthetic oil from low quality shale at $17 a

Analysis: Israel sees shale replacing oil
By LEAH KRAUSS UPI Energy Correspondent
www.upi.com/Energy/view.php?StoryID=20061107-070924-5161r
****************************************

This is probaby to good to be true but still attests to the power of market driven Economies. The cost of Tar Sands oil is about $23 and as a result Alberta Canada is a boom town in the process of increasing production from 1M a day to 3M a day all destined for the USA all displacing other imports. The US govt just opened 3 areas in Colorado with huge shale oil deposits for testing. If the cost is anywhere near $17 Colorado will be the new boomtown and we'll have another majir alternative to ME oil supplies.

There was also an interesting article in the recent Polular Science issue granting an annual innovation award to a wind turbine company for a reasonably practical design for home wind power. It's still double the cost of the neighborhood electric company but with credits is competitive in a number of situations. It's the best effort yet and sales for wind power will increase driving more investment in R & D and better designs to come. Capitalism works!

don't hear that Bush has raised the interest rates, do you?

Bush inherited a recession, stock market collapse, accounting scandals and 9/11. Raising interest rates would have been brain dead. He LOWERED them and cut taxes creating the current boom with 4.4% unemployment.

We can at least agree the positive changes since 1981 have been stunning. Western Europe hasn't created a single private sector job since 1981. The USA has created over 20M well paying jobs in that period. The American economy is quite simply one of the wonders of the world.

I remember Jimmy Carter quite well. The 444 day hostage crises, the national malaise, expecting permanent $5 a gallon gasoline, Shale oil boondoggles, etc., Reagan turned it all around. What has to be so depressing for the French is to know we'll continue to bury them economically. They're about to fall out of the top ten economically and by 2020 out of the top 15. They become less relevent every day.

3rd PAUL - how markets work, from CQ.

*******
The Senate gave overwhelming approval late Thursday to President Bush’s deal for nuclear cooperation with India, a vote that expressed that a goal of nurturing India as an ally outweighed concerns over the risks of spreading nuclear know-how and bomb-making materials.
By a vote of 85 to 12, senators agreed to a program that would allow the United States to send nuclear fuel and technology to India, which has refused to sign the Nuclear Nonproliferation Treaty.

The agreement, negotiated by President Bush and Prime Minister Manmohan Singh of India in March, calls for the United States to end a decades-long moratorium on sales of nuclear fuel and reactor components. For its part, India would divide its reactor facilities into civilian and military nuclear programs, with civilian facilities open to international inspections.
**********

India needs our uranium to supply the fuel needed for the nuclear power plants needed for it's massive economic expansion. An expansion the USA is actively participating in and benefiting from.

For example we know we have a massive labor shortage pending as the economy continue to grow but the boomers retire. What better place to export jobs to than English speaking, demcratic and rapidly growing India? Plus they understand better than Europe the threat of Islamic fundamentalism. Europes welfare state economies, pacificism, weak militaries and shrinking populations have made them liabilities in the war on terror. India is getting stronger.

As Henry Kissinger observed, nations have permanent interests, not permanent friends. India has the largest middle class in the world outide the USA and along with Japan and Australia promise to be a strong ally in the war against islamic terrorism. It makes sense to advance trade with India as rapidly as possible AND help them achieve their own energy independence. There's little resistance in India to nuclear power and it would be a terrific market for General Electric. They win, we win, everyone wins!

This is just one way GWB has been using market driven solutions to global warming and global demand for fossil fuels.

http://en.wikipedia.org/wiki/Insider_trading

Come-on didn’t you watch the Stephen Colbert demonstration regarding the reliability of the ‘evidence’ on wikipedia? Please use creditable evidence, you know, like peer reviewed journals. Trade organizations don’t count; they can be advancing their own agenda and cherry pick their supporting references. ...just like governments agencies.

BTW JeffII - Brilliant post on ll/17 9:17pm! This is by far the more interesting blog.

Kandis

like peer reviewed journals

Peer reviewed journals are often worse. They always go with the conventional wisdom no matter how little data supports it. Once an idea becomes PC scientists are the worst form of lemming.

An enduring legacy
Nov 17th 2006
From Economist.com

One of the most influential economists of the 20th century has died

AFP
MILTON FRIEDMAN won the John Bates Clark Medal, awarded to an outstanding American economist under the age of 40, in 1951. Many consider it harder to win than a Nobel Prize. One of the measures of his greatness is that when he got it, he still had not done any of the work for which he would become most famous. Still to come were the permanent-income hypothesis, his groundbreaking “A Monetary History of the United States” (co-written with Anna Schwartz) and the proposal of a natural rate of unemployment.

These works revolutionised the conduct of central banks around the world. But to non-economists Mr Friedman’s great achievement is not his challenge to Keynesian demand management but the popular writings that challenged a consensus favouring ever-greater state intervention in the economy. This work, too, came long after his peers had recognised him as a leading light. At the time of his death on Thursday November 16th, the 94-year-old economist was still working to spread his ideas about free markets, this time through a documentary for American public television.

It is another mark of his greatness that so many of the ideas that seemed crazy when he came up with them—from blaming the Depression on bad central-bank policy, to school vouchers and the volunteer army—have gained mainstream acceptance. But Mr Friedman always recognised that his success was fragile; free markets and stable money have lots of enemies, particularly among politicians. He has left us a staggering legacy of economic theory and public-policy prescriptions—but is that inheritance growing or shrinking?

Certainly, on the monetary side, Mr Friedman remains a giant

You're punching above your weight, Kevin Drum.

You look silly as do many of the above commenters.

The single most important determinant of everything is Energy Technology.

The more you can use energy efficiently to do what you want to do (grow food, move heavy loads, build buildings, etc).

Our quality of life has skyrocketed (along with inflation) since we figured out how to more efficiently use energy-figuring out that we could turn useless grass into transportation, food production, etc by having horses eat it), using wind power (sails to windmills) and water (water wheels & hydroelectric dams) and fossil fuels.

Fundamentally, inflation goes up because we have a net useful energy gain every generation. everything's relative worth is suddenly part of a bigger pie. When we don't have new energy technologies, inflation bounces around the zero point, unless you fuck up the monetary policy or do something else that screws the system up, but that really isn't a fundamental.

"Friedman obviously never raised a teenager."

You're dead-wrong about that. Check out www.daviddfriedman.com. (I used to sit and listen to him talk - seldom agreed with anything he said, but he has a mighty pretty line of chin music. Just like his old man, I guess. ;) )

Maven

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The single most important determinant of everything is Energy Technology

No it isn't nor is it even remotely close. Energy represents about 3% of USA GDP and many, many nations are energy independent and haven't invented a thing in 1,000 years. The breath-taking wealth creation in the USA is the result of capitalism and freedom.