Milton Friedman on the Federal Reserve

71 passages for “the Federal Reserve”, 58 checked against the source. Page 7 of 8.

Full topic page: Monetary policy and the Federal Reserve

1. “Keep your eye on one thing and one thing only: how much government is spending, because that is the true tax. Every budget is balanced. There is no such thing as an unbalanced federal budget. You're paying for it. If you're not paying for it in the form of explicit taxes, you're paying for it indirectly in the form of inflation or in the form of borrowing. The thing that you keep your eye on is what government spends. And the real problem is to hold down government spending as a fraction of our income. And if you do that, you can stop worrying about the deficit.”

2. “The first victory came in Tennessee on March 7, 1978, when a 2-to-1 majority approved an amendment to limit the “rate of growth” of state spending to the “estimated rate of growth of the state’s economy.””

3. “That illustrates a general rule: If a private enterprise is a failure, it closes down—unless it can get a government subsidy to keep it going; if a government enterprise fails, it is expanded. I challenge you to find exceptions.”

4. “By this line of reasoning, the corner grocer and the A&P are “recipient institutions” because some of their customers receive social-security checks. The New York Times and The Chicago Tribune are Federal contractors because welfare recipients buy papers. How silly can you get?”

5. “The U.S. is still, fortunately, some way from a national health service. However, the rising costs of medical care—as government has expanded its role and bureaucracy has multiplied—presumably reflect an early stage of the process documented by Gammon.”

6. “It is my view that it is desirable for the people to limit their government's budget, to decide how much in total they are willing to pay for their government. Having done this, it is desirable for them to delegate to their elected representatives the difficult task of dividing that budget among competing good proposals.”

7. “That is a widespread myth, that it is possible to spend money with nobody paying for it. You have everybody screaming that we ought to have new, bigger, more generous government programs. Where are we going to raise the money? Tax business. But business corporations can’t pay any taxes. A corporate executive may sign the check, but where does he get the money? From his stockholders or from his customers or from his employees. Unlike the federal government, he doesn’t have a printing press in his basement. So the only way he can pay money to the government is imposing a burden on somebody. Government cannot spend money at nobody’s expense.”

8. “Nixon was the most socialist of the presidents of the United States in the 20th century. ( … ) Well, his ideas were not socialist, quite the opposite, but if you look at what happened during his administration, first of all, the number of pages in the Federal Register, which is full of regulations about business, doubled during his regime.”

9. “From the political point of view, increased spending may initially be designed to be temporary but few things become more permanent than temporary spending. Hence, the economists are in fact calling for a still higher level of government spending yet, in my view, reducing the scope of government is our most important single objective.”

10. “One down, 49 to go. That is the present state of the grassroots movement that Ronald Reagan started in California five years ago when he sponsored Proposition 1—a constitutional amendment to limit spending by the state government to a specified, and slowly declining, fraction of the personal income of the residents of California.”