U.S. News --- CAPITAL: Channeling Milton Friedman
Enough about John Maynard Keynes. We can be sure the 20th century British economic giant would advise more government spending to spur U.S. economic growth with consumers and businesses so hesitant and short-term interest rates at zero.</br></br>What would Milton Friedman, the University of Chicago champion of monetary discipline, do now? What would he say -- reversing the charges when he returned a reporter's call, as he always did -- if asked about Federal Reserve Chairman Ben Bernanke's imminent move to print hundreds of billions of dollars to buy more Treasury bonds to put more money into the economy?</br></br>We can't ask him. He died in 2006. "Friedman," says one of his eminent students, Robert Lucas of the University of Chicago, "was such an original thinker that one could never guess how he would react to a new question." Nevertheless, this seems a ripe moment to contemplate Friedman's views and those of his disciples.</br></br>Friedman believed in the power of money: the more money, the more income and, eventually, the more inflation. He didn't think the Fed could deliver full employment. He regarded interest rates as a misleading measure of whether the Fed was loose or tight.</br></br>He didn't trust central bankers. He blamed the Bank of Japan for the deflation of the 1990s and the Fed for the Great Depression of the 1930s and the Great Inflation of the 1970s. He would, if his co-author Anna Schwartz is any clue, have condemned recent bank bailouts.