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What Happened Was That For Every $100 Of Money, By Which I Mean The Cash That People Keep In Their Pockets, And The Deposits They Have In The Bank, For Every $100 Of Money That There Was In 1929, By 1933 There Was Only $67. The Federal Reserve Allowed The Quantity Of Money To Decline By A Third. While, At All Times, It Had The Possibilities And The Power Of Preventing That From Happening.

-Milton Friedman

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What Happened Was That

Milton Friedman

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What Happened Was That For Every $100 Of Money, By Which I Mean The Cash That People Keep In Their Pockets, And The Deposits They Have In The Bank, For Every $100 Of Money That There Was In 1929, By 1933 There Was Only $67. The Federal Reserve Allowed The Quantity Of Money To Decline By A Third. While, At All Times, It Had The Possibilities And The Power Of Preventing That From Happening.

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You Never Can Cure Poverty. Poverty Is In The Eye Of The Beholder.

You Could Not Possibly Maintain The Current Level Of Government Taxation Without The Taxes Being Hidden, And They Are Hidden In Two Very Different Ways. They Are Hidden Through Withholding, But They Are Also Hidden By Being Imposed On Business, Supposedly On Business, When Really, Of Course, Business Can't Pay Taxes, Only People Can Pay Taxes.

Political Freedom Means The Absence Of Coercion Of A Man By His Fellow Men. The Fundamental Threat To Freedom Is Power To Coerce, Be It In The Hands Of A Monarch, A Dictator, An Oligarchy, Or A Momentary Majority. The Preservation Of Freedom Requires The Elimination Of Such Concentration Of Power To The Fullest Possible Extent And The Dispersal And Distribution Of Whatever Power Cannot Be Eliminated — A System Of Checks And Balances.

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The Argument For Collectivism Is Simple If False; It Is An Immediate Emotional Argument. The Argument For Individualism Is Subtle And Sophisticated; It Is An Indirect Rational Argument. And The Emotional Faculties Are More Highly Developed In Most Men Than The Rational, Paradoxically Or Especially Even In Those Who Regard Themselves As Intellectuals.

The Power To Determine The Quantity Of Money... Is Too Important, Too Pervasive, To Be Exercised By A Few People, However Public-spirited, If There Is Any Feasible Alternative. There Is No Need For Such Arbitrary Power.

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Because We Live In A Largely Free Society, We Tend To Forget How Limited Is The Span Of Time And The Part Of The Globe For Which There Has Ever Been Anything Like Political Freedom: The Typical State Of Mankind Is Tyranny, Servitude, And Misery.

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The Important Issue Is Not How Much Inequality There Is But How Much Opportunity There Is For Individuals To Get Out Of The Bottom Classes And Into The Top. If There Is Enough Movement Upward, People Will Accept The Efficiency Of The Markets. If You Have Opportunity, There Is A Great Tolerance For Inequality. That Has Been The Saving Grace Of The American System.

Drugs Are A Tragedy For Addicts. But Criminalizing Their Use Converts That Tragedy Into A Disaster For Society, For Users And Non-users Alike. Our Experience With The Prohibition Of Drugs Is A Replay Of Our Experience With The Prohibition Of Alcoholic Beverages.

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I Cannot Disagree With You That Having Something Like 500 Economists Is Extremely Unhealthy. As You Say, It Is Not Conducive To Independent, Objective Research. You And I Know There Has Been Censorship Of The Material Published. Equally Important, The Location Of The Economists In The Federal Reserve Has Had A Significant Influence On The Kind Of Research They Do, Biasing That Research Toward Noncontroversial Technical Papers On Method As Opposed To Substantive Papers On Policy And Results

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Government Is A Way By Which Every Individual Believes He Can Live At The Expense Of Everybody Else.

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If You Cannot State A Proposition Clearly And Unambiguously, You Do Not Understand It.

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[u]nemployment Is ... A Side Effect Of The Cure For Inflation.

Every Person Shall Be Free To Do Good ' At His Own Expense.

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Federal Reserve

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The History Of Mankind Is The History Of Money Losing Value.

The Future Of Private Enterprise Capitalism Is Also The Future Of A Free Society. There Is No Possibility Of Having A Politically Free Society Unless The Major Part Of Its Economic Resources Are Operated Under A Capitalistic Private Enterprise System.

I Believe That The Monetary Stability Is An Absolutely Critical Element In The Satisfactory Operation Of A System.

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You Can Travel From One End Of The Industrialized World To The Other And Almost The Only People You Will Find Engaging In Backbreaking Toil Are People Who Are Doing It For Sport. To Find People Whose Day's Toil Has Not Been Lightened By Mechanical Invention, You Must Go To The Non-capitalist World.

The Most Important Single Central Fact About A Free Market Is That No Exchange Takes Place Unless Both Parties Benefit.

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To The Free Man, The Country Is The Collection Of Individuals Who Compose It, Not Something Over And Above Them.

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The Power To Determine The Quantity Of Money... Is Too Important, Too Pervasive, To Be Exercised By A Few People, However Public-spirited, If There Is Any Feasible Alternative. There Is No Need For Such Arbitrary Power... Any System Which Gives So Much Power And So Much Discretion To A Few Men, [so] That Mistakes - Excusable Or Not - Can Have Such Far Reaching Effects, Is A Bad System. It Is A Bad System To Believers In Freedom Just Because It Gives A Few Men Such Power Without Any Effective Check By The Body Politic - This Is The Key Political Argument Against An Independent Central Bank.

The Great Depression, Like Most Other Periods Of Severe Unemployment, Was Produced By Government Mismanagement Rather Than By Any Inherent Instability Of The Private Economy.

How Do You Hold Down Government Spending?

Government Spending

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If You Really Want To Engage In Policy Activity, Don't Make That Your Vocation. Make It Your Avocation. Get A Job. Get A Secure Base Of Income. Otherwise, You're Going To Get Corrupted And Destroyed.

There Are Severe Limits To The Good That The Government Can Do For The Economy, But There Are Almost No Limits To The Harm It Can Do.

Education Spending Will Be Most Effective If It Relies On Parental Choice & Private Initiative -- The Building Blocks Of Success Throughout Our Society.

Inflation Is A Monetary Phenomenon. It Is Made By Or Stopped By The Central Bank.

Saying It Is One Thing. Doing It Is Very Different.

Columbus Did Not Seek A New Route To The Indies In Response To A Majority Directive.

Concentrated Power Is Not Rendered Harmless By The Good Intentions Of Those Who Create It.

Look, For Example, At The Obvious, Immediate, Practical Example Of Illegal Mexican Immigration. Now, That Mexican Immigration, Over The Border, Is A Good Thing. It's A Good Thing For The Illegal Immigrants. It's A Good Thing For The United States. It's A Good Thing For The Citizens Of The Country. But, It's Only Good So Long As Its Illegal....

The Federal Reserve The Privately Owned U.s. Central Bank Definitely Caused The Great Depression By Contracting The Amount Of Currency In Circulation By One Third From 1929 To 1933.

Great Depression

Federal Reserve

The Power To Do Good Is Also The Power To Do Harm.

The Most Unresolved Problem Of The Day Is Precisely The Problem That Concerned The Founders Of This Nation: How To Limit The Scope And Power Of Government. Tyranny, Restrictions On Human Freedom, Come Primarily From Governmental Restrictions That We Ourselves Have Set Up.

Inflation Is Always And Everywhere A Monetary Phenomenon In The Sense That It Is And Can Be Produced Only By A More Rapid Increase In The Quantity Of Money Than In Output.

The Only Reason There Is A Crisis About Social Security In The Us And Pensions In Europe And Japan Is That You Cannot Maintain A "ponzi" Scheme Indefinitely. We Have Collected From Today's Young To Pay Today's Old And Counted On Tomorrow's Young To Keep Doing So. That Was A Fine Scheme As Long As The Number Of Young People Was Rising Faster Than Old People. When That Ratio Comes To An End, Such A System Also Has To End.

There Have Been Unions Based On Gold Or Silver, But Not On Fiat Money - Money Tempted To Inflate - Put Out By Politically Independent Entities.

If A Country Is An Attractive Place For Foreigners To Invest Their Funds, Then That Country Will Have A Relatively High Exchange Rate. If It's An Unattractive Place, It Will Have A Relatively Low Exchange Rate. Those Are The Fundamentals That Determine The Exchange Rate In A Floating Exchange Rate System.

The Internet Is The Most Effective Instrument We Have For Globalization.

Our Emphasis Here Is Based Not Only On The Growing Seriousness Of Drug-related Crimes, But Also On The Belief That Relieving Our Police And Our Courts From Having To Fight Losing Battles Against Drug Use Will Enable Their Energies And Facilities To Be Devoted More Fully To Combating Other Forms Of Crime.

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Inflation Is The One Form Of Taxation That Can Be Imposed Without Legislation.

The Most Important Ways In Which I Think The Internet Will Affect The Big Issue Is That It Will Make It More Difficult For Government To Collect Taxes.

Freedom Means Diversity But Also Mobility. It Preserves The Opportunity For Today's Disadvantaged To Become Tomorrow's Privileged And, In The Process, Enables Almost Everyone, From Top To Bottom, To Enjoy A Fuller And Richer Life.

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Hell Hath No Fury

Politicians Will Always Spend Every Penny Of Tax Raised And Whatever Else They Can Get Away With.

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Universities Exist To Transmit Knowledge And Understanding Of Ideas And Values To Students Not To Provide Entertainment For Spectators Or Employment For Athletes.

Humility Is The Distinguishing Virtue Of The Believer In Freedom; Arrogance, Of The Paternalist.

I'd Like To Promote Lots Of Things. I'd Like To Promote Elimination Of Drug Prohibition. I'd Like To Promote Parental Choice In Education Through Vouchers. Those Are Two Things I Think Are Very Urgent And Important. They're Both More Important Than The Harm Which Social Security Will Do.

The Benefits Of A Tariff Are Visible. Union Workers Can See They Are "protected". The Harm Which A Tariff Does Is Invisible. It's Spread Widely. There Are People That Don't Have Jobs Because Of Tariffs But They Don't Know It.

Every Economist Knows That Minimum Wages Either Do Nothing Or Cause Inflation And Unemployment. That's Not A Statement, It's A Definition.

Theories Can Be Based On Any Assumptions, However Bizarre.

If You Do Not Force Political Freedom, Economic Freedom Will Be Stymied Sooner Or Later.

If Freedom Led To Wider Inequality, I Would Prefer That To A World In Which I Got Artificial Equality At The Expense Of Freedom. My Objective, My God... Is Freedom Of Individuals To Pursue Their Own Values.

How Did We Make The Transition From Using Wood To Using Coal, From Using Coal To Using Oil, From Using Oil To Using Natural Gas? How In God's Name Did We Make That Transition Without A Federal Energy Agency?

Our Minds Tell Us, And History Confirms, That The Great Threat To Freedom Is The Concentration Of Power. Government Is Necessary To Preserve Our Freedom, It Is An Instrument Through Which We Can Exercise Our Freedom; Yet By Concentrating Power In Political Hands, It Is Also A Threat To Freedom. Even Though The Men Who Wield This Power Initially Be Of Good Will And Even Though They Be Not Corrupted By The Power They Exercise, The Power Will Both Attract And Form Men Of A Different Stamp.

I Want People To Take Thought About Their Condition And To Recognize That The Maintainence Of A Free Society Is A Very Difficult And Complicated Thing And It Requires A Self-denying Ordinance Of The Most Extreme Kind. It Requires A Willingness To Put Up With Temporary Evils On The Basis Of The Subtle And Sophisticated Understanding That If You Step In To Do Something About Them You Not Only May Make Them Worse, You Will Spread Your Tenticles And Get Bad Results Elsewhere.

The Broader And More Influential Organisations Of Businessmen Have Acted To Undermine The Basic Foundation Of The Free Market System They Purport To Represent And Defend.

We Economists Don't Know Much, But We Do Know How To Create A Shortage. If You Want To Create A Shortage Of Tomatoes, For Example, Just Pass A Law That Retailers Can't Sell Tomatoes For More Than Two Cents Per Pound. Instantly You'll Have A Tomato Shortage. It's The Same With Oil Or Gas.

People Who Intend Only To Seek Their Own Benefit Are “led By An Invisible Hand To Serve A Public Interest Which Was No Part Of” Their Intention. I Say That There Is A Reverse Invisible Hand: People Who Intend To Serve Only The Public Interest Are Led By An Invisible Hand To Serve Private Interests Which Was No Part Of Their Intention.

To Really Understand Something You've Got To Reduce It To Its Principles.

[t]he Burden Of Government Is Not Measured By How Much It Taxes, But By How Much It Spends.

Fundamentally, There Are Only Two Ways Of Coordinating The Economic Activities Of Millions. One Is Central Direction Involving The Use Of Coercion - The Technique Of The Army And Of The Modern Totalitarian State. The Other Is Voluntary Cooperation Of Individuals - The Technique Of The Marketplace.

Statistics Do Not Speak For Themselves.

One Role Of Prohibition Is In Making The Drug Market More Lucrative.

Every Businessman Is In Favor Of Freedom For Everybody Else, But When It Comes To Himself That's A Different Question. He's Always The Special Case. He Ought To Get Special Privileges From The Government, A Tariff, This, That And The Other Thing.

Significant Changes In The Growth Rate Of Money Supply, Even Small Ones, Impact The Financial Markets First. Then, They Impact Changes In The Real Economy, Usually In Six To Nine Months, But In A Range Of Three To 18 Months. Usually In About Two Years In The Us, They Correlate With Changes In The Rate Of Inflation Or Deflation." "the Leads Are Long And Variable, Though The More Inflation A Society Has Experienced, History Shows, The Shorter The Time Lead Will Be Between A Change In Money Supply Growth And The Subsequent Change In Inflation.

Significant Change

See, If You Look At The Drug War From A Purely Economic Point Of View, The Role Of The Government Is To Protect The Drug Cartel. That's Literally True.

Government Power Must Be Dispersed. If Government Is To Exercise Power, Better In The County Than In The State, Better In The State Than In Washington. If I Do Not Like What My Local Community Does, Be It In Sewage Disposal, Or Zoning, Or Schools, I Can Move To Another Local Community, And Though Few May Take This Step, The Mere Possibility Acts As A Check. If I Do Not Like What Washington Imposes, I Have Few Alternatives In This World Of Jealous Nations.

I Do Not Believe There Is A Natural Resource Economics. I Believe There Is Good Economics And Bad Economics.

No Central Banker Would Disagree With The Proposition That Inflation Is Primarily A Monetary Phenomenon. Not One Of Them Will Disagree That Every Inflation Has Been Accompanied By A Rapid Increase In The Quantity Of Money And Every Deflation By A Decline In The Quantity Of Money.

I Think Almost Every Economist Would Agree That Government Gets Itself In Trouble When It Tries To Interfere With Voluntary Behavior.

The Current Oil Crisis Has Not Been Produced By The Oil Companies. It Is A Result Of Governmental Mismanagement Exacerbated By The Mideast War.

Japan Has Introduced Fiscal Stimulus Five Times In The Past Seven Or Eight Years And Each Time It's Been A Failure And That's Not A Surprise. Fiscal Stimulus Is Not Stimulating In And Of Itself.

We Measure Poverty By What I Believe Is A Very, Very Crude Concept. We Actually Measure Poverty By Trying To Get Some Kind Of An Estimate Of The Minimum Expenditures On Food That Are Required To Maintain Health, Multiplying That Number By Three, And Saying That's The Level Of Poverty. And It's A Very Crude, Inaccurate Arrangement.

You Must Distinguish Sharply Between Being Pro Free Enterprise And Being Pro Business.

Free Enterprise

The True Test Of Any Scholar's Work Is Not What His Contemporaries Say, But What Happens To His Work In The Next 25 Or 50 Years. And The Thing That I Will Really Be Proud Of Is If Some Of The Work I Have Done Is Still Cited In The Text Books Long After I Am Gone.

A Minimum-wage Law Is, In Reality, A Law That Makes It Illegal For An Employer To Hire A Person With Limited Skills.

Inflation Is Always And Everywhere A Monetary Phenomenon In The Sense That It Is And Can Be Produced Only By A More Rapid Increase In The Quantity Of Money Than In Output... A Steady Rate Of Monetary Growth At A Moderate Level Can Provide A Framework Under Which A Country Can Have Little Inflation And Much Growth. It Will Not Produce Perfect Stability; It Will Not Produce Heaven On Earth; But It Can Make An Important Contribution To A Stable Economic Society.

I Want People To Take Thought About Their Condition And To Recognize That The Maintenance Of A Free Society Is A Very Difficult And Complicated Thing And It Requires A Self-denying Ordinance Of The Most Extreme Kind

My Interest In Political Philosophy Was Rather Casual Until I Met Hayek.

There Is No Logical Basis For The Prohibition Of Marijuana. $7.7 Billion Is A Lot Of Money, But That Is One Of The Lesser Evils. Our Failure To Successfully Enforce These Laws Is Responsible For The Deaths Of Thousands Of People In Colombia. I Haven't Even Included The Harm To Young People. It's Absolutely Disgraceful To Think Of Picking Up A 22-year-old For Smoking Pot. More Disgraceful Is The Denial Of Marijuana For Medical Purposes.

It Doesn't Worry Me A Bit That China And Japan Hold So Much Us Debt. In A Way, It Seems Foolish For Them To Do It Because They Get Lower Returns Than They Might Elsewhere. But That Is Their Business.

Nobody Spends Somebody Else's Money As Carefully As He Spends His Own.

Economy And Economics

Complete Free Trade Is Not Politically Feasible. Why? Because It's Only In The General Interest And In No One's Special Interest.

Germany Has A Very Able And Productive Workforce. It Has High-quality Products That Are Valued All Over The World. It Has Every Opportunity To Be A Productive, Growing State. It Just Has To Give Its Entrepreneurs A Chance. It Has To Let Them Make Money, Hire And Fire, And Act Like Entrepreneurs.

How Can Thinking People Believe That A Government That Cannot Deliver The Mail Can Deliver Gas Better Than Exxon, Mobil, Texaco, Gulf, And The Rest?

A Real Gold Standard Is Thoroughly Consistent With [classical] Liberal Principles And I, For One, Am Entirely In Favor Of Measures Promoting Its Development.

The Black Market Was A Way Of Getting Around Government Controls. It Was A Way Of Enabling The Free Market To Work. It Was A Way Of Opening Up, Enabling People.

A Society That Puts Equality — In The Sense Of Equality Of Outcome — Ahead Of Freedom Will End Up With Neither Equality Nor Freedom. The Use Of Force To Achieve Equality Will Destroy Freedom, And The Force, Introduced For Good Purposes, Will End Up In The Hands Of People Who Use It To Promote Their Own Interests.

The Internet Moves Us Closer To "perfect Information" On Markets. Individuals And Companies Alike Can Buy And Sell Across Borders And Jurisdictions Wherever They Find The Best Match Of Supply And Demand.

What Most People Really Object To When They Object To A Free Market Is That It Is So Hard For Them To Shape It To Their Own Will. The Market Gives People What The People Want Instead Of What Other People Think They Ought To Want. At The Bottom Of Many Criticisms Of The Market Economy Is Really Lack Of Belief In Freedom Itself.

You Never Have Real Changes Unless You Have A Time Of Crisis.

Times Of Crisis

Even The Most Ardent Environmentalist Doesn't Really Want To Stop Pollution. If He Thinks About It, And Doesn't Just Talk About It, He Wants To Have The Right Amount Of Pollution. We Can't Really Afford To Eliminate It - Not Without Abandoning All The Benefits Of Technology That We Not Only Enjoy But On Which We Depend.

The Great Achievements Of Civilization Have Not Come From Government Bureaus.

If The Government Is To Try And Ban Private Consumption Of Alcohol And Tobacco, It Must Surely Ban Such Activities As Hang-gliding, Skiing, Rock-climbing And So On. Where Should It Stop? Rugby? American Football? Ice Hockey? Insofar As The Government Has Information Not Generally Available About The Merits Or Demerits Of The Items We Ingest Or The Activities We Engage In, Let It Give Us The Information. But Let It Leave Us Free To Choose What Chances We Want To Take With Our Own Lives.

Anything That Government Can Do, Private Enterprise Can Do For Half The Cost.

The Free Man Will Ask Neither What His Country Can Do For Him Nor What He Can Do For His Country. He Will Ask Rather 'what Can I And My Compatriots Do Through Government' To Help Us Discharge Our Individual Responsibilities, To Achieve Our Several Goals And Purposes, And Above All, To Protect Our Freedom?

If Freedom Were Not So Economically Efficient It Certainly Wouldn't Stand A Chance.

There Is One And Only One Social Responsibility Of Business - To Use It Resources And Engage In Activities Designed To Increase Its Profits So Long As It Stays Within The Rules Of The Game, Which Is To Say, Engages In Open And Free Competition Without Deception Or Fraud.

History Suggests That Capitalism Is A Necessary Condition For Political Freedom. Clearly It Is Not A Sufficient Condition.

The Rule Of Law Does Not Guarantee Freedom, Since General Law As Well As Personal Edicts Can Be Tyrannical. But Increasing Reliance On The Rule Of Law Clearly Played A Major Role In Transforming Western Society From A World In Which The Ordinary Citizen Was Literally Subject To The Arbitrary Will Of His Master To A World In Which The Ordinary Citizen Could Regard Himself As His Own Master

The Stock Market Crashed In October 1929. But That Was Not The Cause Of What Caused The Great Depression. It Was, In My Opinion, A Very Minor Element Of It. What Happened Was That From 1929 To 1933 You Had A Major Contraction Which, In My Opinion, Was Caused Primarily By The Failure Of The Federal Reserve System, To Follow The Course Of Action For Which It Was Set Up. It Was Set Up To Prevent Exactly What Happened From 1929 To 1933. But Instead Of Preventing It, They Facilitated It.

There Is No Other Complex Field In Our Society In Which Do-it-yourself Beats Out Factory Production Or Market Production. Nobody Makes His Or Her Own Car. But It Is Still The Case That Parents Can Perform The Job Of Educating Their Children [homeschooling], In Many Cases Better Than Our Present Education System.

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