Speaking today at an event in Indianapolis, Federal Reserve Chairman Ben Bernanke defended his support for the third round of quantitative easing by invoking the name of the late, great free-market economist Milton Friedman. Yes, really:
Bernanke on Friedman: "he would support central planning"
— zerohedge (@zerohedge) October 1, 2012
#Bernanke: late Stanford colleague Milton Friedman would have supported Fed actions. Cites Friedman Depression analysis blaming tight money.
— Eric Berman (@WIBC_EricBerman) October 1, 2012
As blogger Michael Krieger writes, Bernanke is absolutely full of it. Krieger highlights a 2008 interview with Anna Schwartz, Friedman’s co-author on “A Monetary History of the United States,” in which Schwartz called Bernanke out on his support for the Fed’s decidedly anti-free-market policies:
Rather, “firms that made wrong decisions should fail,” she says bluntly. “You shouldn’t rescue them. And once that’s established as a principle, I think the market recognizes that it makes sense. Everything works much better when wrong decisions are punished and good decisions make you rich.” The trouble is, “that’s not the way the world has been going in recent years.”
In 2002, Mr. Bernanke, then a Federal Reserve Board governor, said in a speech in honor of Mr. Friedman’s 90th birthday, “I would like to say to Milton and Anna: Regarding the Great Depression. You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again.”
“This was [his] claim to be worthy of running the Fed,” she says. He was “familiar with history. He knew what had been done.” But perhaps this is actually Mr. Bernanke’s biggest problem. Today’s crisis isn’t a replay of the problem in the 1930s, but our central bankers have responded by using the tools they should have used then. They are fighting the last war. The result, she argues, has been failure. “I don’t see that they’ve achieved what they should have been trying to achieve. So my verdict on this present Fed leadership is that they have not really done their job.”
Be sure to read Krieger’s full post.
Those who understand the concept of the free market were rather shocked by Bernanke’s bold claim:
Sure Ben? Would Milton? "@pdacosta: Bernanke says he's a very big fan of Milton Friedman, thinks he would have supported what Fed is doing."
— LEANDRO CASERIO (@leocaserio) October 1, 2012
Really, Bernanke? Milton Friedman would have approved of your latest actions… #qe3
— Drew W. Straub (@UCDWS) October 1, 2012
— MoneyForNothing (@DismantleFed) October 1, 2012
— Daniel Daly (@DeusVult1911) October 1, 2012
Ben Bernanke: "I think Milton Friedman would approve of what the Fed is doing now." HAHAHAHAHAHAHAHA
— Chris (@TheNewAdvisory) October 1, 2012
Milton Friedman believed in free markets. Bernanke believes in crony capitalism. Couldn't be more distinct in both intellect and morality
— Michael Krieger (@LibertyBlitz) October 1, 2012
This Twitterer said it best:
No. He most certainly is not.