Milton Friedman believed the “ Great Depression, ” from 1929 through 1932, could hold been avoided had the authorities injected sufficient liquidness into the economic system. This modern twenty-four hours economic expert, who passed off in 2006, opposed Keynesian positions that said money does non count, independent disbursement does-primarily authorities disbursement plus private investing, and that financial policy is important while pecuniary policy is merely a minor adjunct ( Friedman and Friedman Two 228 ) . Friedman worked through these thoughts, proved them incorrect, became the laminitis and taking advocate of “ monetarism, ” and was highly influential among universe leaders of the twentieth century. He believed in limited authorities intercession and that the chief function of the authorities is to protect the freedoms of the people to let for competitory capitalist economy in a free market ( Friedman and Friedman Capitalism 4 ) . His positions on economic sciences are followed closely today by Chairman of the Federal Reserve Ben Bernanke and others and his beliefs about avoiding the Great Depression will be standing the trial of modern twenty-four hours times as today, the United States ‘ economic system goes through a major recession. Milton Friedman ‘s tried economic theories have been popular among economic experts, particularly as the US economic system experienced flourishing times, and shortly we may cognize if his advice was plenty to really maneuver us off from another possible depression.
Friedman was born in 1912 to Jewish immigrants in New York City. He was extremely educated in the field of economic sciences holding obtained a unmarried man ‘s grade from Rutgers University in 1932, a maestro ‘s grade from the University of Chicago in 1933 and a doctor’s degree of economic sciences from Columbia University in 1946. When he finished at Rutgers he had to do a pick. He had two tuition scholarship offers for alumnus school — to analyze applied mathematics at Brown or economic sciences at Chicago. He loved economic sciences and at the clip, the United States was in the center of the Great Depression. He knew the job was with the United States economic sciences and he wanted to larn more about it ( Friedman and Friedman Two 33 ) , While taking categories in the University of Chicago ‘s reputable economic sciences plan, Milton met his married woman Rose Director from Portland, Oregon. They studied the topic together and worked in the same statistics research lab ( 39 ) . Prior to really get marrieding Rose, Milton spent a twelvemonth at Columbia University to go on his alumnus surveies. The following twelvemonth he returned to Chicago once more and worked as an helper professor and research helper. During this clip of the Great Depression, the Keynesian radical school of idea was outstanding but Chicago economic experts were non as enthusiastic about its ideals ( 41 ) , Finally Friedman married this fellow economic expert in 1938. The twosome worked closely together back uping each other ‘s positions and even went on to compose legion books sing the economic system and their experiences together throughout their married life.
In the earlier old ages Friedman gained much experience as a research economic expert. He worked for the National Bureau of Economic Research in New York starting in 1937 analyzing professional incomes, for the US Treasury Tax Research Division in 1941 working on wartime revenue enhancement policy and was a instructor and research worker at universities such as University of Wisconsin, University of Minnesota, University of Chicago and Hoover Institute at Stanford University. The University of Chicago became his chief rational place after he took the topographic point of one of his former professors learning economic theory ( Friedman, Milton ) .
Through his old ages of survey and research Friedman developed many economic beliefs and theories, which are extremely regarded to this twenty-four hours. Some of these include the lasting income hypothesis, the built-in failing of financial policy, the measure theory of money, and the natural rate hypothesis. The lasting income hypothesis says that, “ the picks consumers make sing their ingestion forms are determined non by current income but by their longer-term income outlooks. Measured income and measured ingestion contain a lasting ( anticipated and planned ) component and a transitory ( windfall/unexpected ) component ( Friedman, A theory ) . ” Friedman believed that people consume proportionately to their income and that those with lower incomes have a higher inclination to devour and those with upper degree incomes have a lower than mean inclination to devour. These surveies lead to Friedman ‘s notable Theory of Consumption Function.
Friedman ‘s account of the built-in failing of financial policy claims that the authorities ‘s attempts to pass more money to hike the economic system would non make new wealth but instead relocate bing wealth. He backed up his beliefs with empirical surveies based on the American economic system during World War One, World War Two and the Civil War. He concludes that pecuniary policy produces a more positive consequence on the economic system. This led him to believe in the measure theory of money, which asserts that additions in the supply of money will take to significant rises in nominal incomes — non monetary values ( Skousen 384 ) . This thought was in resistance to Keynes thoughts about liquidness traps.
Friedman ‘s natural rate hypothesis considers unemployment and the authorities ‘s function. His hypothesis says that in the long run the economic system faces a natural degree of unemployment that can non be for good changed by pecuniary alterations ( Butler and Friedman 159 ) . He believes that in a short term state of affairs, the authorities can take down unemployment through rising prices, but in the long tally the employment statistics are non affected by rising prices. In order to take down the natural rate of unemployment, Friedman says the authorities must do existent structural alterations in the economic system by making things like de-regulating and take downing minimal pay instead than blow uping the money supply ( 159 ) . While Friedman promotes pecuniary policy he says it can non be used to force the economic system past its natural bounds.
As Friedman researched these theories, analyzing the function of money and pecuniary policy in the economic system, Friedman created the “ monetarism ” school of idea. This philosophy considers the supply of money to be the primary determiner of nominal income and monetary values in the economic system ( Friedman and Friedman Two 228 ) . Harmonizing to this position, the private economic system will fundamentally stay stable unless a perturbation of rapid money supply fluctuations or other authorities actions occur. He advocated the thought that the state ‘s money supply grow steadily to avoid overexpansion and rising prices.
While Friedman began showing his thoughts publically in the late 50 ‘s and early 60 ‘s, he was frequently disregarded because of the popularity of John Keynes ‘ economic ideals. It was non until Friedman was able to exponentially turn out many of his beliefs and theories that he gained ill fame. Even so, post-Keynesian economic experts refused to believe that rising prices was ever a pecuniary phenomenon, but did accept the fact that it normally was ( Matusow 178-79 ) . Many text editions now demonstrate Friedman ‘s monetarist positions and its of import function in the economic system. They besides are denouncing the ineffectualness of financial policy ( Skousen 392-93 ) During the late 1970 ‘s Friedman began carrying a good figure of Western economic experts in order to diminish the rate of growing of the money supply, which lowered rising prices drastically throughout Europe and North America ( 409 ) .
Friedman became so extremely respected that in the late 60 ‘s that he was given chances to run into with and rede U.S. and universe leaders such as Richard Nixon, Margaret Thatcher and Ronald Reagan. His thoughts and influences were experienced abroad, peculiarly in the United Kingdom, where Friedman worked with Thatcher ‘s authorities every bit good ( Frazer 570 ) . Friedman ‘s work besides was so extremely respected that he was awarded the John Bates Clark Medal, honouring economic experts under age 40, in 1941 and the Nobel Prize in Economics in 1976. After his Nobel award he was interviewed on the Meet the Press telecasting plan. In this interview Friedman expressed his involvement in cognizing what people would believe of his works 25 or 50 old ages down the route. He felt that so would be a better clip to judge its quality ( Friedman and Friedman Two 442 ) .
While Friedman was an incredibly intelligent adult male with a acute sense for understanding economic sciences and his achievements are far making, standing the trial of clip seems to be the true justice of an economic experts work. One can merely inquire how others will see his theories in another clip. Once we move through the recession of our clip, I wonder how it will impact the positions of economic experts worldwide. Possibly economic sciences is an country that we will ne’er wholly understand or it is something that could be continually improved upon. It is interesting to see the far-reaching effects of this one adult male ‘s economic surveies, research, and one might inquire, will his theories last for many old ages to come?