Milton Friedman

Mr. Friedman was born in Brooklyn, New York, on July 31, 1912, to Jewish immigrants from the Kingdom of Hungary (now Berehove, Ukraine). He entered high school two years early allowing him to enrolled at Rutgers at age sixteen. After receiving a master’s degree in economics at the University of Chicago and fellowship at Columbia, he returned to the University of Chicago as a research assistant for one year.

Friedman was unable to find academic work in 1935 causing him almost fortuitously to find employment in Washington, D.C., as an economist in Franklin D. Roosevelt’s New Deal. This experience would lead to a life of ideas, hypotheses, theories, papers and books. He did not agree with the price- and wage-fixing measures during the depression and believed that all government intervention should have been money supply expansion not contraction. Later he argued, along with Anna Schwartz, in Monetary History of the United States, 1867-1960, that the Great Depression was caused by severe monetary contraction from the banking crisis and poor Federal Reserve policies.

There Friedman also developed concepts of “monetarism” which would become a rebut to Keynes’ macroeconomics, an ongoing intellectual “dispute” that he would wage his entire life. Monetarism maintained that money supply is the driver of prosperity and recession and that Keynesian fiscal spending does not work. Macroeconomic policy limits the effects of the business cycle through government fiscal and monetary policy, mainly spending.

Next came academic work at the University of Wisconsin-Madison (1940) teaching economics, although short lived. He experienced antisemitism as well as differences of opinion regarding entering WWII and resigned (tall poppied) in 1941. After  short stints at the United States Department of Treasury, Columbia University where he earned his PhD, and University of Minnesota, he returned to the University of Chicago in 1946 where he remained for the next thirty-one years.

Friedman espoused free markets, minimal government oversight of the economy, and individual choice, which was in direct opposition to John Maynard Keynes. As an economic theorist, he analyzed the relationship between income and spending on consumption (consumption function) and reassessment of the effect on employment on inflation (Phillips curve). He won the Nobel Memorial Prize in Economic Sciences in 1976 for his achievements “in fields of consumption analysis, monetary history and theory and for his demonstration of the complexity of stabilization policy” and was an American Nobel Laureate economist.

Keynes was ranked as the most popular economist in the twentieth century, perhaps rightly so since many governments adopted his policies which were developed in the late nineteenth-century and early twentieth centuries when many economies and governments were developing. The Economist stated Friedman, who died  was the most influential during the second half of the century. His wisdom was missed his during the great recession although Bernanke did open the gates flooding the system with liquidity.

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