Milton Friedman: The Great Depression
Posted by Orrin Woodward on April 15, 2013
Milton Friedman is one of the great monetarist economist of all-time. Mr. Friedman clearly identifies the culprit for the Great Depression. It isn’t the free enterprise business system as commonly believed, but rather government manipulation of the money supply. In fact, the total money supply from 1929 to 1933 declined by 1/3, forcing a contraction and subsequent depression of the American economy. The Federal Reserve failed in the very task it was assigned to prevent.
Sadly, the monetary history of the Great Depression was not analyzed until after the economic field had practically given-up on free-enterprise system. In other words, the government failure was quickly blamed on free enterprise business which allowed Keynesian economist and politicians to demand further Statist interventions into our free society. Milton Friedman’s book on the monetary history of America is irrefutable and reveals quantitatively the reduction in money supply that caused the Great Depression. Indeed, few events, in the history of mankind, have caused as much damage as the Keynesian revolution suggesting a Statist solutions to a Statist failure.
Statism and liberty are polar opposites with society. On one hand, free enterprise allows free people to make free choices. It works, according to Adam Smith on the concept of the “invisible hand” within society. The State, on the other hand, uses coercion to force people to do what it says. Consequently, it should be used only for defense – internal and external – within society. When it’s role expands beyond this limited objective, society no longer applies the “invisible hand” of free enterprise, but rather the “visible fist” of the State. Which does the reader think ensures the long-term freedom of society’s members? In short, this summarizes the reason why Oliver DeMille and I wrote LeaderShift! Here is a video of Mr. Friedman’s explaining the Great Depression.