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Milton Friedman on Spending other people's money

As U.S. citizens, we cannot and should not prevent German and Japanese governmental officials from speculating with their taxpayers’ money. That is a task for German and Japanese citizens. But we can and should restrain our own officials.

Context. From an April 1973 column written after the international monetary crisis of early 1973, in which the dollar was devalued on February 12, 1973 and the major currencies soon moved to floating exchange rates.

Speculation and Speculation
Column, 1973, A column of April 23, 1973, 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” (pp. 2590 to 2591). The reprint names no publication and gives no date; the date is his own, from “Back to the Gaming Table” (1978), which says “I wrote in this space (April 23, 1973)” and quotes this column’s passage on the swap agreements word for word, Congressional Record, February 7, 1978, pp. 2590 to 2591
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Milton Friedman, “Speculation and Speculation” (A column of April 23, 1973, 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” (pp. 2590 to 2591). The reprint names no publication and gives no date; the date is his own, from “Back to the Gaming Table” (1978), which says “I wrote in this space (April 23, 1973)” and quotes this column’s passage on the swap agreements word for word, 1973), Congressional Record, February 7, 1978, pp. 2590 to 2591. https://miltonfriedman.org/quotes/restrain-our-own-officials-currency-speculation-1973

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He also said

  1. Another fallacy seldom contradicted is that exports are good, imports bad. The truth is very different. We cannot eat, wear, or enjoy the goods we send abroad. We eat bananas from Central America, wear Italian shoes, drive German automobiles, and enjoy programs we see on our Japanese TV sets. Our gain from foreign trade is what we import. Exports are the price we pay to get imports. As Adam Smith saw so clearly, the citizens of a nation benefit from getting as large a volume of imports as possible in return for its exports, or equivalently, from exporting as little as possible to pay for its imports.

    Context. From Free to Choose (1980), written with Rose D. Friedman, in the chapter “The Tyranny of Controls”, on international trade.

    Free to Choose
    Book, 1980, Ch. 2 “The Tyranny of Controls”, p. 41
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  2. 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 Table
    Column, 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. 2590
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  3. In a free society, a government has no business using the power of the law or the taxpayers’ money to propagandize for some views and to prevent the transmission of others.
    An Economist's Protest: Columns in Political Economy
    Book, 1969, Collected in An Economist’s Protest: Columns in Political Economy (Thomas Horton and Company, 1972), “Book Burning, FCC Style,” column of June 16, 1969, p. 153
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