Milton Friedman What the Fed Should Have Done to Prevent the Depression (Common Sense Capitalism)

To Watch the Entire Free to Choose series:
http://commonsensecapitalism.blogspot.com/p/free-to-choose.html

Milton Friedman explains the purpose of the Federal Reserve and what it could have done to mitigate the impact of the Great Depression. Instead, the Fed stood idly by as things got worse. Today, many people believe that the New Deal saved us from the Depression, or that the stock market crash caused the depression. The facts show differently, for more go to commonsensecapitalism.blogspot.com

Category:

News & Politics

Tags:

• milton friedman
• great depression
• federal reserve
• feds role in great depression
• new deal
• common sense capitalism

[CommonSenseCap]

I'm not necessarily sure about the theory you point out above in relation to the Great Depression, but I do believe that high inflation can cause depressions.

It's something we should have our eye on while the Fed had the accelerator on the floor.

[jneil2007]

@Vodka2389 Well Friedman agrees with Rothbard. Friedman is talking about from 29 to the early 33. The money supply was reduced by about one third. That's what made the depression great. If the fed and the government stayed out of the way than it would have been over quickly. The Fed knew what it was doing. They plunged our economy and consolidated more banks. This is exactly what Jefferson warned us about.

[Vodka2389]

I used to subscribe to Friedman's theory before I discovered Rothbard's explanation of the GD. It wasn't caused by a lack money being pumped into the economy, but by having an artificially low interest rate during the 1920's; too much inflation not too little.

Sounds familiar? Yes, it's exactly the same reason for today's crises.