Living Within our Means

PBS Openmind - Living Within our Means with Milton Friedman (in color)

Can Friedman’s Money Rule Stabilize the Economy?

"Can Friedman's Money Rule Stabilize the Economy?" by Frank Shostak:

Contrary to Friedman however, we suggest that the boom is not just about an increase in the rate of growth of the money supply; it is also about various nonproductive activities that spring up on the back of the expanding money-supply rate of growth. Furthermore, we maintain that an economic bust is not about a fall in the rate of growth of the money supply; it is about the elimination of various nonproductive activities on account of the decline in the rate of growth of the money supply.

An increase in the money supply out of thin air sets in motion the so-called "counterfeit effect." It lays the foundation for nonproductive activities, which consume and add nothing to the pool of real funding or real wealth. These activities divert real funding from wealth generators, thus weakening their ability to grow the economy.

The 4 Ways to Spend Money (1)

- When a man spends his own money to buy something for himself, he is very careful about how much he spends and how he spends it.

- When a man spends his own money to buy something for someone else, he is still very careful about how much he spends, but somewhat less what he spends it on.

- When a man spends someone else's money to buy something for himself, he is very careful about what he buys, but doesn't care at all how much he spends.

- And when a man spends someone else's money on someone else, he does't care how much he spends or what he spends it on. And that's government for you.

The 4 Ways to Spend Money by Milton Friedman

The 4 Ways to Spend Money (0)