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<!DOCTYPE html PUBLIC "-//ABISOURCE//DTD XHTML plus AWML 2.2//EN" "http://www.abisource.com/2004/xhtml-awml/xhtml-awml.mod"><div> <html xmlns="http://www.w3.org/1999/xhtml" xmlns:awml="http://www.abisource.com/2004/xhtml-awml/"> <head> <meta http-equiv="Content-Type" content="application/xhtml+xml; charset=UTF-8" /> <title> </title> </head> <body> <p class="header" style="text-align:left" awml:style="Header"> MILTON FRIEDMAN: THE LEGACY </p> </body> <div> <h2 id="AbiTOC0" awml:style="Heading 2"> </h2> <h2 id="AbiTOC1" awml:style="Heading 2"> </h2> <h2 id="AbiTOC2" awml:style="Heading 2"> </h2> <h2 id="AbiTOC3" awml:style="Heading 2"> </h2> <h2 id="AbiTOC4" awml:style="Heading 2"> </h2> <h2 id="AbiTOC5" awml:style="Heading 2"> </h2> <h2 id="AbiTOC6" awml:style="Heading 2"> </h2> <h2 id="AbiTOC7" awml:style="Heading 2"> Milton Friedman: The Legacy </h2> <p class="text_body" style="text-align:center" awml:style="Text body"> First Last </p> <p class="text_body" style="text-align:center" awml:style="Text body"> Your Schools name </p> <p class="text_body" style="text-align:center" awml:style="Text body"> </p> <p class="text_body" style="text-align:left" awml:style="Text body"> </p> <p class="text_body" style="text-align:left" awml:style="Text body"> </p> <p class="text_body" style="text-align:left" awml:style="Text body"> </p> <p class="text_body" style="text-align:left" awml:style="Text body"> </p> <p class="text_body" style="text-align:left" awml:style="Text body"> </p> <p class="text_body" style="text-align:left" awml:style="Text body"> </p> <p class="text_body" style="text-align:left" awml:style="Text body"> </p> <p class="text_body" style="text-align:left" awml:style="Text body"> Throughout the ages there have always been key figures in economic reform and development, But none have truly had an impact like Milton Friedman did<span style="font-size:14pt">.</span> Born in Brooklyn, New York in July 31,1912 Friedman would tie with John Keynes as being the most influential economist during the 20<span style="vertical-align:super">th</span> century<span style="font-size:14pt">.</span> He received his M<span style="font-size:14pt">.</span>A at the University of Chicago and his PhD at Colombia University<span style="font-size:14pt">.</span> He was also a teacher at the University of Chicago for over 30 years publishing various controversial and enlightening essays and books<span style="font-size:14pt">.</span> And then in 1976 he received the Nobel Memorial Prize in economic Sciences for “his achievements in the field of consumption analysis, monetary history and theory, and for his demonstration of the complexity of stabilization policy<span style="font-size:14pt">.</span>”(Econlib,2004) In the 1950's and 60's, people had held the belief that free market without government intervention could lead to another great Depression, and Friedman worked to change that thinking<span style="font-size:14pt">.</span> To fully understand how Friedman changed the 20<span style="vertical-align:super">th</span> century one has to look at what he did, how/why he gained his fame and the lasting effects of his policies<span style="font-size:14pt">.</span> There are numerous examples to draw from such as his idea of what caused the great depression, his policies toward an army, opinions toward the government,etc<span style="font-size:14pt">.</span> Then one can look at today's situation of rising debt and uncontrolled spending and think how Friedman would respond to the situation and what he would implement? </p> <p class="text_body" style="text-align:left" awml:style="Text body"> <span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'">Some would say that Friedmans first recognition was his first independent book</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman';text-transform:none;color:#000000"> </span><span class="emphasis_text" style="font-weight:bold;font-size:12pt;font-family:'Times New Roman';text-transform:none;color:#000000">Capitalism and Freedom</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman';text-transform:none;color:#000000"> (1962)</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'"> , where countless recommendations that he made were looked upon by politicians and economists to be enacted towards policy</span><span style="font-weight:bold;font-size:14pt;font-family:'Times New Roman'">.</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'"> This first book came from many of things he witnessed when he first entered economic policy and regulation which was during the second world war</span><span style="font-weight:bold;font-size:14pt;font-family:'Times New Roman'">.</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'"> While working at the Treasury department he was faced with how to collect taxes on a poor country that had just come out of a war</span><span style="font-weight:bold;font-size:14pt;font-family:'Times New Roman'">.</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'"> Faced with this problem he developed the tax-withholding system that is still used by the IRS today</span><span style="font-weight:bold;font-size:14pt;font-family:'Times New Roman'">.</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'"> However the single most idea that Friedman was famous for were his views on the Great Depression</span><span style="font-weight:bold;font-size:14pt;font-family:'Times New Roman'">.</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'"> The cause for the Great Depression had for the most part been blamed on free markets</span><span style="font-weight:bold;font-size:14pt;font-family:'Times New Roman'">.</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'"> This sort of thinking ushered in a new set of strict governmental and regulation policies to ensure that such an event never happened again</span><span style="font-weight:bold;font-size:14pt;font-family:'Times New Roman'">.</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'"> However Friedman argued that the cause of the Great Depression was not free markets but rather poor monetary policy</span><span style="font-weight:bold;font-size:14pt;font-family:'Times New Roman'">.</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'"> He said that the cause of the Great Depression could be placed upon the government and their poor monetary policies that turned what could have been a short rescission and into a depression</span><span style="font-weight:bold;font-size:14pt;font-family:'Times New Roman'">.</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'"> He detailed his views and his minute careful analysis of the Great Depression in a book he co-authored with Anna Schwartz titled “</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman';text-transform:none;color:#333333">Monetary History of the United States, 1867–1960</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'"> “</span><span style="font-weight:bold;font-size:14pt;font-family:'Times New Roman'">.</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'"> From this book also stemmed his most influential work in economics on revising the views and effects of the money supply aka “The quantity theory of money”(Cite thisshit)</span><span style="font-weight:bold;font-size:14pt;font-family:'Times New Roman'">.</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'"> Friedman also wanted as little government intervention as possible calling for less use of fiscal policy, no currency intervention in the forex markets and that the federal reserve be used as a machine where it would slowly increase the quantity of money at a steady rate and have no need for human intervention</span><span style="font-weight:bold;font-size:14pt;font-family:'Times New Roman'">.</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'"> An interesting on the Federal Reserve was that this point of view was the absolute maximum privilege he would give to it</span><span style="font-weight:bold;font-size:14pt;font-family:'Times New Roman'">.</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'"> In fact he called for the ending of the fed as evidenced by this quote “</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman';text-transform:none;color:#333333">Any system which gives so much power and so much discretion to a few men, [so] that mistakes — excusable or not — can have such far reaching effects, is a bad system</span><span style="font-weight:bold;font-size:14pt;font-family:'Times New Roman';text-transform:none;color:#333333">.</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman';text-transform:none;color:#333333"> It is a bad system to believers in freedom just because it gives a few men such power without any effective check by the body politic — this is the key political argument against an independent central bank…To paraphrase Clemenceau, money is much too serious a matter to be left to the central bankers</span><span style="font-weight:bold;font-size:14pt;font-family:'Times New Roman';text-transform:none;color:#333333">.</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman';text-transform:none;color:#333333">” (washingtons blog)</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'"> While not his most known work, Friedman considers his permanent income hypothesis as his greatest work</span><span style="font-weight:bold;font-size:14pt;font-family:'Times New Roman'">.</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'"> To summarize, the permanent income hypothesis states that a persons spending its based off of what they believe their total income will be and not just a short change in their income</span><span style="font-weight:bold;font-size:14pt;font-family:'Times New Roman'">.</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'"> Overall Friedman had countless contributions to economic and regulatory policy changes that brought him to fame but it is also important to see how those changes have affected the economy of today</span><span style="font-weight:bold;font-size:14pt;font-family:'Times New Roman'">.</span> </p> <p class="text_body" style="text-align:left" awml:style="Text body"> <span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'">Friedman views are classified as being pro-free market</span><span style="font-weight:bold;font-size:14pt;font-family:'Times New Roman'">.</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'"> While on its own not a bad form of economic policy it can have far reaching effects</span><span style="font-weight:bold;font-size:14pt;font-family:'Times New Roman'">.</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'"> First to look at the time when Friedman was at his peak would be during the 1980s Reagan-Thatcher regime where he was an adviser of economics to the president</span><span style="font-weight:bold;font-size:14pt;font-family:'Times New Roman'">.</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'"> From that point started a big deregulatory trend that was helped along by chairman Allen Greenspan(also a proponent of deregulation)</span><span style="font-weight:bold;font-size:14pt;font-family:'Times New Roman'">.</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'"> In 1988 Friedman received the Presidential Medal of Freedom where at first his deregulation policies and lassiez faire economic style was promoting growth</span><span style="font-weight:bold;font-size:14pt;font-family:'Times New Roman'">.</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'"> However this form of economic policy, when pushed too far can have far reaching consequences</span><span style="font-weight:bold;font-size:14pt;font-family:'Times New Roman'">.</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'"> During the 1990's a series of deregulation acts were passed that essentially repealed many of the acts that were once implemented during the great depression</span><span style="font-weight:bold;font-size:14pt;font-family:'Times New Roman'">.</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'"> The most notably is the passing of the Gramm-Leach-Bliely act which repealed the Glass-Steagel Act which had separated commercial and investment banks</span><span style="font-weight:bold;font-size:14pt;font-family:'Times New Roman'">.</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'"> Close to 15 years later the United States enters an economic downturn which many have compared to being one of the worst, only second to the Great Depression</span><span style="font-weight:bold;font-size:14pt;font-family:'Times New Roman'">.</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'"> But can the blame be placed upon Friedman? One would say that maybe he set things in motion but to say that the entire housing market collapse and global decreased in worldwide GDP is entirely his fault would be an hyperbole statement</span><span style="font-weight:bold;font-size:14pt;font-family:'Times New Roman'">.</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'"> If Friedman were alive now I believe he would several disagree with current policies and make several drastic changes to economic policy</span><span style="font-weight:bold;font-size:14pt;font-family:'Times New Roman'">.</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'"></span></p> <p class="text_body" style="text-align:left" awml:style="Text body"> <span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'">Looking back at our current economic situation, many say that the begging was around the time the BIS imposed a 9% reserve at all times on central banks which started a 20 year period of economic slowdown in Japan</span><span style="font-weight:bold;font-size:14pt;font-family:'Times New Roman'">.</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'"> Later in 2004 the BIS then passed a new act that said banks were not supposed to have a floating reserve at all times that was based on market valuation at the time</span><span style="font-weight:bold;font-size:14pt;font-family:'Times New Roman'">.</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'"> In late 2007 the USA implemented this policy and within a year the beginnings of the housing market collapse could be seen along with stricter credit regulations and a decline in the stock market</span><span style="font-weight:bold;font-size:14pt;font-family:'Times New Roman'">.</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'"> As discussed earlier Friedman strongly opposed the federal reserve and the BIS could be considered the federal reserve of the entire world, thus Friedman would once again blame our current market collapse on the BIS and the USA for implementing such a policy</span><span style="font-weight:bold;font-size:14pt;font-family:'Times New Roman'">.</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'"> At the minimum he would want for the US to withdraw from the global world bank and end fractional reserve banking</span><span style="font-weight:bold;font-size:14pt;font-family:'Times New Roman'">.</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'"> Looking at Friedman more famous writings some of his previous ideas that Friedman would implement would be reduce spending extremely to end the trillion dollar debt</span><span style="font-weight:bold;font-size:14pt;font-family:'Times New Roman'">.</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'"> He would also believe that many of the policies(stimulus package,Obama care) enacted by Obama would prolong the high rise of unemployment that the current economic climate is having right now</span><span style="font-weight:bold;font-size:14pt;font-family:'Times New Roman'">.</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'"> This can be seen by his disdain for spending and government intervention for a more favored approach of reducing taxes. He also would have been somewhat opposed to the Federal reserves quantitative easing plan as he was in favor of the “natural rate hypothesis” which stated that by pushing employment above the limits of economic society simply caused salaries to increase causing inflation. The reason why he would have been somewhat opposed to the quantitative easing is because he believed that there are times when it is a good thing, as evidenced by his opinion on Japan during the 90's where a “monetary kiss of life” would be beneficial. Looking at Friedman views and writings, overall it seems he would not be very happy with the current economic situation and its policies.</span> </p> <p class="text_body" style="text-align:left" awml:style="Text body"> <span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'">Today Friedman's views are just as interesting, new, exciting and controversial now as they were when they first came out during the 20</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman';vertical-align:super">th</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'"> century. His libertarian politics and new approach was a fresh change from the long held Keynesian economics theory that preceded him. Its almost best to display the change in economic thinking as an analogy to religious reform in Christianity. One could think that John Keynes economics were a reformation from previous economic theory similar to Martin Luther and the protestants, and then to think of Friedman as the counter-reformation similar to the loyolas. But no matter how one looks at it, Friedman was an intellect, economist ,politician, and teacher who shaped the course of economic history during the 20</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman';vertical-align:super">th</span><span style="font-weight:bold;font-size:12pt;font-family:'Times New Roman'"> century and with far greater effects into the future than most could have ever imagined.</span> </p> <p class="header" style="text-align:left" awml:style="Header"> </p> </div> </html> </div> ">
