Milton Friedman Interview with Dallas Fed President Richard W. Fisher

Dallas Fed president and CEO Richard W. Fisher sat down with economist Milton Friedman on October 19, 2005, as part of ongoing discussions with the Nobel Prize winner. In a wide-ranging interview, Friedman and Fisher discuss a myriad of topics, including globalization, China, the Federal Reserve, free trade, government spending and education reform.

• Category

  Education

[21nickik]

The great error of the monetarist is the assumtion about Velocity. Friedman (for some time) wanted stable growth in M because he assumed V is constant. The reality is that V is not constant, you dont have to make M stable you have to make MV stable. We should target stable (or stable growth) of MV.

The reason inflation targeting has worked so well because V did not change very much (witch is why the monetarist assumed that it didnt) but we have seen that it does.

[Alan Brown]

By the way, Fisher has some great ideas about 'too big to fail' banks.

[Alan Brown]

What seems to be missed by Friedman, in the discussion of financing spending with taxes versus spending, is that debt enables more spending than ever before. And more people than ever before are saving and subsidizing the debt-driven spending.

Of course, we are able to look back over the carnage of all that debt has caused, the poop that has hit the fan since this interview 7 years ago.