Milton Friedman on Keynesian Economics

[casienwhey]

Ahhh, the good old days when TV had substance and intelligent civil discourse between intellectuals.

[xbrando]

I agree with this assessment by Friedman. As an Econ student, I can say that while mainstream economics makes widespread use of Keynesian terminology and measurement mechanisms, it does not advocate (typically) for the policy prescriptions that Keynes did. And Keynes himself was a student of the day at hand. He even said something to the extent of "When the facts change, my views change." Keynes and Hayek, two polar opposites, remain my heroes today and inspiration for choosing to study economics.

[PunmasterSTP]

So much of this went above my head, but it was still pretty interesting to listen to, and hopefully I picked something up.

[willroman]

Friedman speaks with admirable clarity. It’s uncommon today.

[jlerwin]

It's interesting that Friedman stated that Keynes was a great economist and Hayek said Keynes knew very little about economics

[jeanjean]

“the more significant the theory, the more unrealistic the assumptions” Milton Friedman

[lynxdunwell]

Lets do a poll

Like =Chicago economic
Reply=Austrian ecnomics

[PeterProf]

The classical school (not Austrian), Keynesian school, and monetarists are misguided. These systems assume that the economy WILL always go through boom and bust cycles. These systems assume that the economy will always "get sick." They only disagree on how the economy should be healed.

I teach U.S. Economic History and the 19th century had its share of recessions and deep depressions well before Keynesian economics, so the argument cannot be about Keynesian Economics. Keynesian Economics did not exist in the 19th century. Something else must be causing the boom and bust cycles. The problem is with the banks and paper money. The central bank can easily increase the monetary base. The commercial banks can increase the money supply by lending more money. That is how they make their big profits. Banks controlled and control the money supply through printing and Fractional Reserve Banking loans or providing loans that are multiples of their equity. I will explain the Fractional Reserve Banking System just to keep things simple. The Fractional Reserve Banking System allows commercial banks to only hold 10% of currency in their reserves. That means they can lend out the rest. At a reserve ratio of 10%, a deposit of $100, 000 in currency in a bank can theoretically become one million dollars. It has a multiplier effect of 10. It is re-hypothecation of the currency. So banks increase the money supply for consumers which increases aggregate demand which drives up prices. Credit is the problem. It causes the boom phase.

Then there is the bust phase. When the loans are paid back or if they default, the money supply contracts, sales diminish, unemployment increases, and the result is a recession and or depression depending on the severity of the money supply collapse.

The Constitution says that only the government can coin money. Our Founding Fathers knew that the money supply needed to be controlled. Except for population growth it should be constant. The Constitution prohibits states from "coining" money but in the 18th century there was a loophole. Corrupt politicians chartered state banks and allowed them to print money and the Supreme Court in the 19th century gave banks a "thumbs up." But that decision is a conflict of interest between banks and the Constitution. Banks want larger profits and they got it through increasing the money supply with Fractional Reserve loans and the Constitution wants stable prices that reflect true supply and demand. You can't have both. They are mutually exclusive!

Keep the money supply constant and boom (inflation) and bust (money supply deflation) cycles cannot happen. The Great Depression of 1929 and The Great Recession of 2008 are prime examples as was The Great Depression of 1893, but all American recessions and depressions were caused by a contraction or collapse in the money supply.

So, what is the solution? TOTALLY ELIMINATE COMMERCIAL BANKS ABILITY TO INCREASE THE MONEY SUPPLY THROUGH FRACTIONAL LOANS. PREVENT THE FED FROM EXPANDING THE MONETARY BASE. When the money supply is kept constant, then only the supply of and demand for goods will determine their prices. All economic projects instead should be financed with equity or with time deposit loans (CDs). Neither increases the money supply. Then true savings will be invested instead of with an increased money supply. Then as the economy expands and the supply of goods and services increases, prices for goods and services will NATURALLY fall which increases real wages.

The elephant in the room is the banks. They usurp the Constitution. They have the political power. Economist that work for the government, unfortunately, focus on cleaning up the mess they cause instead of eliminating the root of the problem. Today the Biden administration and the Fed are fighting inflation. They caused it.

Keep the money supply constant and there will be no need to fix it. The definition of insanity: “Doing the same thing over and over and expecting a different result.”

Peter de Luca: Sound Money Economist and Professor

[MrServingSize]

Economics is a science and an art at the same time. It's complex analyses and forecasting patterns coupled with it's beautiful, artistic charts that represent the issues at hand in the economy are amazing. As previously mentioned, economics is a science but it is a realm of opinions, not concrete facts. As the economy progresses, so do ideas and that is where he beauty of this subject lies, in the unknown, the uncertainty of it all. It truly is a fascinating subject and I'm glad I chose to major in it.

[thomasd]

03:18 - Title : IS-LM : An Explanation | John Hicks | Journal of Post Keynesian Economic | 1980

[nthperson]

If only Keynes had remembered what Winston Churchill had warned about the destructive impact of monopolies and monopoly privilege. In 1909, campaigning for a seat in the House of Commons Churchill told the British people that monopoly was the inherited enemy of democracy and of justice. He added that the monopoly of land is "the mother of all monopolies." Churchill's solution echoed the teachings of the Scot political economist Patrick Edward Dove. Government should impose an annual tax on those who control land equal to the potential annual rental value of whatever land is held. Keynes somehow managed to ignored the growing redistribution of wealth associated with the concentrated control over land (broadly defined). Land blessed with natural resources to exploit was climbing in value. The same pattern was occurring in the cities where commerce occurred and population was increasing. Milton Friedman, at least in a very limited way, endorsed the taxation of land rent as what he said is a "least bad tax."

[generalsalami]

Excess consumption is a product of artificially low rates. It makes savings less profitable, encourages inflationary borrowing, & with said inflation it makes people wanna spend now. If we allowed natural deflation, then people would be inclined to hold onto money. This would be lent out to higher order production. With prices falling, people would withdraw consumption into the future (except for necessities).
People would be encouraged to not waist.
This issue is the fault of central banks around the world. Thank you Keynes!

[adtiamzon]

Milton Friedman on Inflation and Keynes theory could have been changed had JKKeynes lived longer. Spot on Milton Friedman. 🌞👏👏

[jamesstevenson]

I think that the overall economic climate is the main reason for the validity of any one economic theory. eg, the post war condition of the world and in particular the UK was a large factor in validating Keynesian economics. Today the dynamics are different and the theory is being adapted accordingly.

[adtiamzon]

Economics is not a dream; Economics is a real measure of life's reality❗️

[mytech]

Now the big political issue comes from the lag in the education system. There is a solid 20 years between shifts in research and that information finally filtering into a new generation of teachers and textbooks. So those theories of the 1930s and 1940s were the basis for the babyboomers' general education.(Not those focused on econ, but rather the bulk of the population.) And many of those boomers continue to carry those failed theories into the voting booth in 2020 and beyond. In addition due to the population spike of that generation their opinions formed a large fraction of popular "knowledge" for an extended time period and were passed into later generations through sheer volume of repetition in common social interaction and political rhetoric.

The perfect storm of misinformation.

[Thesm]

Ravishing the planet for shareholder dividends and executive bonuses.

[navigatroncidadesinteligentes]

I started laughing in the begining of the video because i thought ... " i never saw friedman not being bald LOL "

[upvotecomment]

Disagree and Agree... wish this was longer. whats the full clip of this?

[Yo_Kelz]

I dont always agree with Friedman but this was a great take on Keynes.