Milton Friedman on Monetary policy and the Federal Reserve
Yes, but I would substitute a computer for it, not a central bank. All you would have to do is have it buy or sell X dollars of securities. It is purely a technical matter.
Context. From an August 1998 interview in Barron’s, reprinted in the Hoover Digest as “Mr. Market.” He has just said, “My ideal is to eliminate the Federal Reserve.” The interviewer asks whether his long-standing proposal of steady growth in a monetary aggregate would not still need a central bank to carry it out.
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Cite this passage
Milton Friedman, “Mr. Market” (Interview in Barron’s, August 24, 1998 (the questioner is identified only as Epstein); reprinted in Hoover Digest 1999 No. 1, 1998). https://miltonfriedman.org/quotes/eliminate-federal-reserve-substitute-computer-1998
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He also said
The Fed’s task is to provide stable money at home. The dollar has declined in value against the German mark, the Swiss franc and … because the Fed—with a strong assist from Congress and the Administration—has failed in that task. If we succeeded in curbing inflation, the exchange rates would take care of themselves. If we continue to fail, it only makes matters worse to use currency intervention to paper over the consequences of domestic inflation.
Context. From a 1978 column written after the Federal Reserve and the Treasury announced in early January 1978 that they would intervene in the foreign-exchange markets to support the falling dollar. The ellipsis omits the third currency, which the print misprints.
Back to the Gaming TableColumn, 1978, A column of early 1978, reprinted in the Congressional Record, Senate, February 7, 1978, p. 2590, introduced by Senator William Proxmire among “articles by Professors Friedman, Okun, and Schmidt” under the heading “Letting the Dollar Float”. The reprint names no publication and gives no issue date; the column refers to writing “in this space” in 1973, which marks it as one of his regular columns, Congressional Record, February 7, 1978, p. 2590Checked against the sourceRead the originalAs a matter of principle, I am opposed to independence for the Federal Reserve System. Monetary policy should be administered by a governmental agency in the regular administrative hierarchy ultimately responsible to Congress.
Context. A written statement he sent in reply to the subcommittee’s questionnaire to economists on monetary policy guidelines, printed in the committee’s December 1968 compendium with reprints he enclosed.
Statement to the House Subcommittee on Domestic FinanceTestimony, 1968, Compendium on Monetary Policy Guidelines and Federal Reserve Structure, Subcommittee on Domestic Finance, House Committee on Banking and Currency, 90th Congress, 2nd Session (December 1968), p. 204Checked against the sourceRead the originalAs these remarks indicate, the Social Security program involves a transfer from the young to the old. To some extent such a transfer has occurred throughout history—the young supporting their parents, or other relatives, in old age. … The difference between Social Security and earlier arrangements is that Social Security is compulsory and impersonal—earlier arrangements were voluntary and personal. Moral responsibility is an individual matter, not a social matter. Children helped their parents out of love or duty. They now contribute to the support of someone else’s parents out of compulsion and fear. The earlier transfers strengthened the bonds of the family; the compulsory transfers weaken them.
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