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Milton Friedman on Monetary policy and the Federal Reserve

It is immediately clear that if we were to take up each case separately, a majority would almost surely vote to deny free speech in most cases and perhaps even in every case. ( … ) Exactly the same considerations apply in the monetary area. If each case is considered on its merits, the wrong decision is likely to be made in a large fraction of cases because the decisionmakers are examining only a limited area and are not taking into account the cumulative consequences of the policy as a whole.
Should There Be an Independent Monetary Authority?
Journal article, 1962, In Search of a Monetary Constitution, ed. Leland B. Yeager (Harvard University Press, 1962), pp. 219–243; reprinted in the House Banking and Currency Committee’s 1968 Compendium on Monetary Policy Guidelines and Federal Reserve Structure, pp. 205–214, p. 213 of the 1968 House reprint
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  1. Well, the way in which many economists have implicitly reconciled it is by being in favor of the free market in general and opposed to the free market in particular. This area is a special case. It needs regulation. This area is a special case. You know, the same thing happens to businessmen. Every businessman is in favor of private enterprise. Except for himself.
    The Open Mind
    Interview, 1977, The Open Mind, hosted by Richard Heffner, Episode “A Nobel Laureate on the American Economy” (May 3, 1977)
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  2. The draft is inequitable because irrelevant considerations play so large a role in determining who serves. It is wasteful because deferment of students, fathers and married men jams colleges, raises the birth rate and fuels divorce courts. It is inconsistent with a free society because it exacts compulsory service from some and limits the freedom of others to travel abroad, emigrate or even to talk and act freely. So long as compulsion is retained, these defects are inevitable.
    A Volunteer Army
    Column, 1966, Newsweek (December 19, 1966); reprinted in the Congressional Record, Senate, January 22, 1969, p. 1438, under the heading “From Newsweek magazine, Dec. 19, 1966”. Later collected in An Economist’s Protest (1972)., Congressional Record, January 22, 1969, p. 1438
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  3. The sharper response of production than of prices is typical. An inflationary process, once underway, develops an inertia of its own. It takes an economic slowdown to stop the acceleration of prices and, even then, it takes a long time to restore price stability. That is why it is so important to prevent inflation from gaining momentum.
    Monetary Policy
    Column, 1968, Newsweek (June 3, 1968); reprinted in the House Banking and Currency Committee’s 1968 Compendium on Monetary Policy Guidelines and Federal Reserve Structure, pp. 225–226, p. 226 of the 1968 House reprint
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