Milton Friedman Did a Bad, Bad Thing...
He left no students at Chicago.
Uncle Milton said:
Have the government buy and sell shirt-term assets in order to keep the stock of inside money balances growing smoothly.
That is the "free market" policy.
And it is good because "free market" policies are always good.
But he never explained to any students why government intervention to stabilize the output of the retail banking sector--checking account deposits--was a free market policy (why not some other sector?why not auto production? freight car loadings?).
And he never explained what to do if stabilizing checking account deposits wasn't enough.
And so now Chicago has nothing coherent or useful or constructive to say about our current situation.
cf. krugman.blog.nytimes.com, passim.
