Milton Friedman-A Living Economic Legend
Even those individuals who consider him to be a negative influence upon economic theory cannot deny the impact of Milton Friedman had in deflating the once-uniform confidence economists invested in Keynesian theories of macroeconomics after Keynes' theories of government spending were credited with ending the Great Depression. Unlike Keynes, who advocated sharp, short-term increases in government spending to ameliorate the effects of a recession, Friedman argued against government intervention in the economy. Friedman claimed that the forces of a free market and the Federal Reserve Bank's gradual, continuous increase in the money supply would promote economic growth and thus counter the dangers of a recession. (Silk, 2005) This was at the heart of Friedman's 1957 contributions to economics, called the "Permanent Income Hypothesis" in consumption, that suggested that the more money existed in the economy, the more individuals were willing to spend, in contrast to Keynes' belief that recessi
Friedman is also credited for spurring on the development of conservative or supply side economics during the Reagan Administration in the 1980s. In recent years, the "Chicago School" has accused of "economic imperialism" in the disciplines i.e. "the application of economic reasoning to areas traditionally considered the prerogative of other fields such as political science, legal theory, history and sociology." ("The Chicago School," CEPA, 2005) But whether one dislikes or likes the impact his policies had, one cannot deny Friedman's impact in inspiring a kind of 'reverse' Keynesian revolution of economic theory after the effects of the New Deal caused many economists to lionize Keynes. Friedman was awarded the Nobel Prize in 1976 "for his achievements in the fields of consumption analysis, monetary history and theory and for his demonstration of the complexity of stabilization policy" spanning from his aid with the Marshall Plan to Europe after World War II to his continued influenc
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