Post Keynesians on Milton Friedman

Post KeynesiansonMiltonFriedman

There is some discussion of Milton Friedman at the moment by Paul Krugman (here and here).

So in that spirit, I think some heterodox Keynesian views of Friedman are worth mentioning:

ThomasPalley, “MiltonFriedman: TheGreatConservativePartisan,” November 27th, 2006.

James K. Galbraith, “TheCollapseofMonetarismandtheIrrelevanceofthe New MonetaryConsensus,” March 31, 2008.

Thomas Palley has a nice summing up of Friedman monetarist doctrine:

“Monetarism’s most famous aphorism is that ‘inflation is always and everywhere a monetary phenomenon.’ This saying reflects Friedman’s polemical powers, capturing for monetarists what all sensible economists already knew. Inflation is about rising prices, and prices are intrinsically a monetary phenomenon since they are denominated in money terms.

Sustained inflation requires that the money supply grow in order to finance transacting at higher prices. For Friedman, this made villainous central banks the exclusive cause of inflation because of his belief that they control the money supply. However, the reality is that the private sector can also inflate the money supply through its own credit creation activities. Additionally, central banks (viz. the Bernanke Fed) may be compelled to temporarily accommodate inflationary private sector pressures to avoid triggering costly recessions. The implication is that inflation can have different causes, something Friedman denied. Sometimes inflation is caused by excessively easy monetary policy or large budget deficits financed by central banks. Other times it is due to private sector forces, including speculative booms and conflicts over income distribution.”
Thomas Palley, “Milton Friedman: The Great Conservative Partisan,” November 27th, 2006.

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