Milton Friedman Teaches Monetary Policy

In this cut from our Milton Friedman Speaks series, Dr. Friedman illustrates the basic relationship between the money supply and the consumer price index.

[ARP]

Love to hear this man talk. Brilliant

[DailyHabits]

He is one of the greatest economist, whose wisdom reign even today

[riteshkumarsoni]

Milton Friedman was greatest economist. In how wonderful way he elaborate., I have never seen any such lecture.

[kyled]

Venezuela has the highest inflation rate as of 2019, at approximately 445, 482.00%. Imagine the graph for that country! Yikes.

[manaskumarbehera]

Libertarians: No you can't print money without creating any income it will only lead to inflation.
Authoritarians: haha, money printer go brrr.

[Myndir]

Actually, Friedman didn't endorse inflation targeting and wasn't in favour of inflation even at a low level. If you read "The Optimum Quantity of Money", he argues that a very deflationary price trend (such that the opportunity cost of holding cash is equal to the interest rate on government bonds) would be optimal. He endorsed price stability (i.e. inflation when output falls and deflation/price stability when output rises) as the best politically possible compromise.

[nicholaschristodoulou]

Brilliant. I have no issue recognizing he is my superior in intellect.

[stevemcgee]

6:00 - the chart stops before the CPI inputs were changed to make it seem like prices were not rising as much as they were.

An increase in the money supply by 2% per year should be meant to more or less match an increase in output, and actually would probably result in lowering prices.

A boom era in the US (when MOST people became wealthier) was always during monetary deflation, like 'gay 90's'.

Today, boom eras are defined as asset price increases, which benefit FEW people, hurt most.

[dontaskwhatkindofmusic]

I’m gonna look it up but I wonder how the overall production of money in Brazil compares to the US during these periods. Or production of money per capital rather than production of money per output

[RdyhQ.RDPDyFgDmSZqC]

in the ratio "quantity of money per unit of output", where does the "units of output" number come from?

[SmashBrosBrawl]

Helicopter money is the tool of choice for all politicians now!!!

[stephennickel]

I love it! The comments from the I am smarter than Mr Friedman, one day they might reflect on one self.

[hodoprime]

2% inflation goal and fighting deflation with inflation were Friedman's ideas. Bernanke got his monetary policy from Friedman.

[ukps]

What of cost push inflation eg fuel shortages?

[kondasandeep]

Even the printing press phenomenon failed to explain the consistent low inflation prevailing in the US ...It's really strange!!!

[dafinance]

He forgot to mention that the fed does not represent the government or the people but is a private entity that has its own interests. That is the root of all economic problems. Therefore economies with similar monetary policies will have ups and downs because of greediness and corruption from big government or big corporations.

[talalkhan]

i studied 3 types of inflation in my Alevels economics, one was due to supply of money..But then what about the demand pull inflation and cost push inflation ?

[Myndir]

Also, Bernanke's monetary theory fundamentally contradicts Friedman's (Bernanke is a creditist like the Austrian School rather than a monetarist, i.e. it's credit and bank assets that matter, not the quantity of money) so it would be very surprising if he agreed with Friedman's monetary policy proposals. (He doesn't agree with the Austrians either, but that's only because they're generally anarcho-capitalists and against the Fed entirely.)

[Charlie]

Couldn’t inflation because by an unexpected lake of supply. Isn’t this the classic example of increasing price of the snow shovel in the winter.

[tynoArcher]

Although inflation is definitely a monetary phenomenon, however, the central bank being responsible for it may have been true at the time he said it, but right now it is mostly the responsibility of the commercial banks. Nowadays money is mostly created through loans, which means that who has the control over how much inflation we have are the commercial banks, not the CB.