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
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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