Skip to content

Milton Friedman on Inflation

Inflation will not be stopped by words, only by actions. At the moment, we have the worst of two worlds. Nominal independence of the Federal Reserve without its effective exercise permits Congress and the President to evade responsibility for the creation of money to finance large government deficits.
Why Inflation Persists
Column, 1977, Newsweek (October 3, 1977); reprinted in full in the Congressional Record, Extensions of Remarks, September 29, 1977, p. 31684, introduced by Representative Parren J. Mitchell of Maryland, who gives it as appearing “in the October 3, 1977, issue of Newsweek”, Congressional Record, September 29, 1977, p. 31684
Checked against the sourceRead the originalCite this passage

Where this comes from

Checked against the sourceThe wording was checked against the work itself.

Topics

He also said

  1. It matters little whether the Federal Reserve is unable or unwilling to exercise its independence in deeds as well as words. In either case, let us be done with the fiction that “independence” is somehow or other a bastion against inflation. Let us put the responsibility for the rate of monetary growth—and therewith for the subsequent rate of inflation—squarely and openly on the Administration and Congress.
    Why Inflation Persists
    Column, 1977, Newsweek (October 3, 1977); reprinted in full in the Congressional Record, Extensions of Remarks, September 29, 1977, p. 31684, introduced by Representative Parren J. Mitchell of Maryland, who gives it as appearing “in the October 3, 1977, issue of Newsweek”, Congressional Record, September 29, 1977, p. 31684
    Checked against the sourceRead the original
  2. As 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.
    Statement to the House Subcommittee on Domestic Finance
    Testimony, 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. 204
    Checked against the sourceRead the original
  3. In my opinion, it would be desirable for Congress to instruct the Federal Reserve to adopt this policy. That would assure that the Federal Reserve System would provide a steady and stable background for private and public economic policy, instead of being itself a source of instability as it so often has been in the past and as it is currently being at this very moment.
    Statement to the House Subcommittee on Domestic Finance
    Testimony, 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), pp. 203–204
    Checked against the sourceRead the original

Think this quote is wrong, misattributed, or missing context?Report it and it gets fixed, not argued with.