Milton Friedman contradicting himself??

Economics Economics Questions
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One of the best citations by our loved Milton Friedman is in my opinion this one:
“I think the government solution to a problem is usually as bad as the problem and very often makes the problem worse.” (cit. Milton Friedman)

But! In his book “A monetary history of the United States” page at wikipedia there are things that looks the opposite:

“The book criticizes the Federal Reserve Bank for not keeping the supply of money steady, and not acting as lender of last resort – instead they allowed commercial banks to fail and allowed the economic depression to deepen.” (cit. http://en.wikipedia.org/wiki/A_Monetary_History_of_the_United_States)

Please explain this to me!

Furthermore:

“The Monetary History […]was cited with approval in a 2004 speech by Ben Bernanke, as "transform[ing] the debate about the Great Depression”.

WHAT

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is well-known for sharply diverging with (non-contradicting) Austrians on monetary matters. And when you have a respected free-market economist giving you a blank check to inflate you way out of a recession, you’ll certainly allow him to ‘transform the debate’.

PS: Still, one may say that even monetarism does not make for central banking. It is easily served by free banking, but I suspect was too compromising to even mention this fact.

3

The response above really does a nice job of hitting it, so I’ll just add an agreement. Friedman is well-known for being considerably “wrong” on money in the eyes of Austrians in general. Rothbard stated “…Rothbard’s law, which is that people tend to specialize in what they are worst at. Henry George, for example, is great on everything but land, so therefore he writes about land 90% of the time. Friedman is great except on money, so he concentrates on money. Mises, however, and Kirzner too, always did what they were best at.”

I also remember hearing about him saying something to the effect of Friedman being right 90% of things, but he was wrong on the 10% that really mattered, but I can’t source it.

Here is Friedman explaining his view of the Great Depression. What it boils down to is that the Federal Reserve was supposed to act as lender of last resort and provide liquidity for banks that didn’t have the funds to meet all the demands on the deposits…and when they didn’t, a lot of banks failed, causing the money supply to shrink by a third from 1929-1933 which was at least in large part what he argued was a source for much of the misery of the GD. I’m pretty sure it was this belief that led Friedman to the impression that a central bank and a closely-watched, slow growing money supply was best for economic stability. He saw the effects of the Fed not doing what it was charged to do, so he took the step of saying the Fed does need to do what it is charged with doing.

However, near the end of his life Friedman did change his views, even if only slightly…saying that he would like to have the Fed abolished.

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It’s not like he’s saying the government solution is ALWAYS bad and ALWAYS makes the problem worse, so he’s really not contradicting himself with his ideas on monetary policy.

Of course, like others have said, that doesn’t make monetarism valid.

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Economists

There are a number of economists and other figures in history that are associated --by themselves or by others-- with the ideology of capitalism. Among these are Adam Smith (1723-1790), Ludwig von Mises (1881-1973), Friedrich Hayek (1899-1992), Ayn Rand (1905-1982) and Milton Friedman (1912-2006).

However, all five were not for individual sovereignty and a voluntary order where security, arbitration and reputation are goods traded on the market. Instead, they advocated a rulership of some over others in the name of peace; a glaring contradiction incompatible with capitalism.

On top of this, Smith was also for the monopolistic state to produce roads, bridges, canals, harbors, coinage, a postal service, hallmarking of gold and silver, quality regulation of wool- and linen cloth, regulation of paper money notes, regulation of bank trades, public and compulsory education, publicly funded religious instruction, protection of intellectual property, and more.

Hayek was for the state production of roads, education, a social safety net, theaters, sports grounds, certification of professions, building regulations, food regulations, factory safety and health regulations, restriction on the sale of dangerous goods --including drugs–, and more.

Friedman was for the state production of roads, city parks and the protection of intellectual property, and if a state had a central bank --which he did finally end up being against-- he advocated it steadily inflate and intervene heavily during a depression.

Rand was for the protection of intellectual property.

Mises did not advocate additional state interventions.

http://vforvoluntary.com/capitalism