Milton Friedman advocated Quantitative Easing to prevent the Great Depression

Discussion in 'Economics' started by hedge123, Mar 31, 2011.

  1. hedge123


    To all you QE1,2,...LargeNumberHere critics (including myself), you may be surprised to learn that Milton Friedman strongly believed that it was the FAILURE to enact quantitative easing that created the Great Depression.

    "[The purpose of the Federal Reserve] was to provide the additional cash to meet the demands of depositors when a run arose."

    "Why didn't this system prevent the Great Depression after 1929? Because from 1929 to 1930, after the stock market crash, the Federal Reserve System allowed the quantity of money to decline slowly, thereby throttling the monetary structure."

    "If the Federal Reserve had stepped in, bought government securities on a large scale, providers would have found that they could get their money and stopped asking for it."
  2. these egomaniacs don't understand the business cycle and exacerbate them with silly monetary policies

  3. In this depression, Ben has managed to prove that a QE effort will produce a hyperinflation instead.

    Pick your poison.

    The correct solutiion was to balance the trade and not consume more than we produce all along instead of blowing asset bubbles made out of confetti money.
  4. fed has to do QE to save the monetary system from massive deflation.
    the world's factories can produce 10x more things than people need / are able to consume.

    if joe shmoes and mirandas fernandas will find out the truth- the prices of everything would fall by 70-90% !!!!
  5. I read an article on Bloomerg this morning about Japan business prospects, and the author was complaining/advocating that Japanese companies are very adverse to borrowing, and that this needs to change in order not to have 3rd lost decade.

    Can someone, please explain me how is borrowing helps? Doesn't it need to be paid back with interest?
  6. Why do economic agents (people, companies, govts) borrow?
  7. zdreg


    you and people who share your opinion have never been able to show that deflation creates unfavorable effects. either you are mouthing your liberal professors or articles by clueless liberal reporters.

    milton friedman had a rule of allowing money supply to grow at a steady 3 per cent year. he never suggested printing money in the quanities generated by the QEs which is the path of Zimbabwe etc.
  8. What the hell do you call the Great Depression?
  9. samus


    Let the man speak for himself:

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  10. BVM88


    Yes, but the Fed did not turn out as Friedman had envisioned, so much later in life he believed it was better that it be abolished and government expansion be curtailed:
    #10     Mar 31, 2011