Milton Friedman on The Gold Standard

Dr. Friedman (born July 15, 1912), a 1976 Nobel Prize winner for excellence in economics, was one of the most effective advocates of economic freedoms and free enterprise. A Senior Research Fellow at the Hoover Institution. At the age of 94, Dr. Friedman passed away on November 16, 2006 in San Francisco, California.

"When government -- in pursuit of good intentions -- tries to rearrange the economy, legislate morality, or help special interests, the costs come in inefficiency, lack of innovation, and loss of freedom. Government should be a referee, not an active player. In the United States, government has gone far beyond the basics."

Source:
http://home.att.net/~mwhodges/friedman.htm

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[MrSaemisch]

Most people posting here are fools. Friedman is talking about how the bank failures caused a huge contraction in the money supply and this lead to Great Depression. Inflation is a printing press problem, not a "fiat money" problem. Inflation is a problem to do with rapid growth in the quantity of money. When the Spanish brought back tons or "hard currency" from the new world, the rapid monetization of this gold caused terrible inflation all over Europe.

[WhistlingTube]

@SSTTEEAALLTTHH A full conversion overnight would cause teething problems I agree, but simply allowing people their right to use gold and silver as legal tender would not. Eventually gold and silver would take over the fiat money and people would return to sound economics once again. Catastrophe is inevitable if we all continue doing what we are at the moment, the USA is $15,000,000,000,000 and growing, and the Euro is about to collapse too, this is not what I call sound economics.

[hromi]

@tjtomkins having less what they had in the beginning. Slowly they r picking up, but prices r now so high and jobs so hard to find as they have been moved to China and third world countries that life is very tough and complicated. Marriage has been lowered, less and less children r being born, people work more than before and have less time to truly value the life. We all became some kind of slave to the system for few. I wish that one day I say enough, enough of being slave to money!

[hromi]

@tjtomkins r still missing the land and all that self made capital they had for them selves. My grandfather end up being persecuted because of some crazy conspiracy he is against the regime and ultimately the family became from very known and very respected to poor and anti government. Even after 22 years after we got rid of it we r where we were and to be completely honest its not a big change if u look on the economy system we incorporated from US. People r still slaves and they r

[hromi]

@tjtomkins110% agreed on this one! Just looking on the communism and socialism what it did to Czechoslovakia when it came to power so u all who have never lived in socialism and completely government owned system can imagine. When it came to power it made all the people who were mostly farmers and industrialist completely a corporations of state with government ownership. My grandparents lost land, cattle and were made a supporters of big state agricultural corporations and...

[tjtomkins]

@dave19941000

"The current capitalist economic system"

You're mistaken, there's hardly any country on the planet practising "capitalism", what most countries have is more or less socialism-corporatism but it's NOT "capitalism" because free market capitalism entails no "regulation" & people having right to their life, liberty & property.

[tjtomkins]

@dave19941000

"lack of government intervention is what caused the great depretion"

Exactly the opposite. Govts around the world massively increased MS during WWI, it continued in US with "Roaring 20s" but it was inevitable that the frenzy would end disastrously & it did. The CAUSE of depression was govts creating way more money than they'd gold which is why DESPITE deflation, dollar was revalued to $35 from $20. Depression won't've happened if govt hadn't overexpanded moneysupply

[tjtomkins]

@WhistlingTube

"The problem is, if someone (whoever it is) can create money from nothing - i.e with no cost to them, they will ALWAYS do it"

You hit the nail on the head, sir. Yup, that's THE problem, as people are self-interested, they can't be trusted with such power & history demonstrates that quite ably & that's why creating money out of thin air will always fail & that's exactly why gold, silver , etc were used as money for thousands of years.

[tjtomkins]

@MrSaemisch

"Inflation is a printing press problem, not a "fiat money" problem"

Aside from the fact that money is now mostly "created" on computers, when you call it "printing press problem", it means it's a "fiat money problem" because those who "print" it are fallible, self-interested individuals (as Milton himself would say) so just like any system that depends "right people doing right things", the fiat money system is doomed to failure without having any restriant in place.

[Redfingers]

@MrSaemisch

And yet if you look what he has to say on the Federal Reserve, he disagrees with the system because it is dependent on having the "right man" for the job.

If the Federal Reserve system is insufficient to safeguard a stable rate of inflation, what will be?

If the Federal Reserve had a qualified track record on containing inflation, that would be one thing!

What institution is he proposing as an alternative? You realize you cannot have fiat money without a central bank?

[dave19941000]

@hromi But th lack of government intervention is what caused the great depretion, and in 2008 in the US an Europe, even though it created a dept crisis, another depretion was prevented from occuring. The current capitalist economic system sees on avarage 4 years of recession every 10 years, compared to less then 1 for the Scandinavian Social-Democracies. No system is perfect, but democratic socialism has nations that prove it is better. Friedmanism has nations which prove its failure.

[hromi]

@Ixandius I dont think Friedman wasnt predicting the problems like mortgage crisis. Even in this video he is talking about inflation and economy problems thx to Federal Reserve actions made since great depression. I think its in the tidal gravity of the money creation and one easy logic: before real estate bubble people had a lot of money they were almost loosing their value and then something failed and we had opposite. I think creating a keeping balance in money value is the way togo