Milton vs. Mitt

Elias Isquith

Elias Isquith is a freelance journalist and blogger. He considers Bob Dylan and Walter Sobchak to be the two great Jewish thinkers of our time; he thinks Kafka was half-right when he said there was hope, "but not for us"; and he can be reached through the twitter via @eliasisquith or via email. The opinions he expresses on the blog and throughout the interwebs are exclusively his own.

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16 Responses

  1. Tom Van Dyke says:

    To the “far” right of Larry Summers, too, I guess, who is skeptical*. FTR, “Cato’s” Timothy B. Lee writes on tech and patent issues**, not monetary policy, under the Cato umbrella.

    I was interested there for a bit, and Lee is certainly entitled to his opinion. But I’m uncertain that he bears the Cato imprimatur on this. He should be taken as a Forbes blogger for the purposes of the OP’s link.

    That Friedman would disagree with Romney at this particular moment is not a fact in evidence—it’s a conjecture made by some who seem to have no particular respect for either Friedman or Romney. And yes, of course I have heard of Matthew Yglesias. Everyone I know says he’s very good. 😉
    *Timothy B. Lee is an adjunct scholar at the Cato Institute. He covers tech policy for Ars Technica and blogs at He has written extensively about copyright and patent law, civil liberties, online privacy, and network neutrality regulation. His writings have appeared in numerous publications, including the New York Times, Slate,, and Reason magazine. While earning his master’s degree in computer science at Princeton, he was the co-author of RECAP, a software project that promotes public access to federal court records.


    “However, one has to wonder how much investment businesses are unwilling to undertake at extraordinarily low interest rates that they would be willing to undertake with rates reduced by yet another 25 or 50 basis points. It is also worth querying the quality of projects that businesses judge unprofitable at a -60 basis point real interest rate but choose to undertake at a still more negative real interest rate. There is also the question of whether extremely low safe real interest rates promote bubbles of various kinds.

    There is also an oddity in this renewed emphasis on quantitative easing. The essential aim of such policies is to shorten the debt held by the public or issued by the consolidated public sector comprising both the government and central bank. Any rational chief financial officer in the private sector would see this as a moment to extend debt maturities and lock in low rates – exactly the opposite of what central banks are doing. In the U.S. Treasury, for example, discussions of debt-management policy have had exactly this emphasis. But the Treasury does not alone control the maturity of debt when the central bank is active in all debt markets.”Report

  2. b-psycho says:

    Even assuming that another flood from the Fed would have an effect, doesn’t having to keep pump-priming the economy over and over and over suggest a structural problem that the stimulation is incapable of dealing with?Report

    • greginak in reply to b-psycho says:

      I think the answer would be that the pump priming is taking the place of what should have been more direct stimulus spending and also trying to help people out a bit while the inevitably slow recovery keeps creeping along.Report

    • Morat20 in reply to b-psycho says:

      Fiscal stimulus would work. It is not forthcoming. The Fed has options, some of which not just Friedman have speculated on in the past, on other economies in similar positions. (I believe Bernacke himself was of a considerably different mind on the issue, a decade or so ago).

      Me, when it comes to blaming the Fed, I’m more curious about their abandonment of the employment half of their mandate, as well as their sudden — yet unofficial — change of the inflation target to 2%.

      I simply cannot imagine the Fed otherwise deciding to sit on it’s hands. With inflation a full third below target, and unemployment high — the rationale for not acting is thin. Even pursuing their actual official 3% target would be of some help.

      I’d love to blame invisible bond vigilantes, but they seem to have mostly disappeared. I suspect it’s simpler than that — the Fed is staffed with bankers, and most of the board are bankers, and really — the lower inflation, the better for bankers. Just the nature of the beast.

      Structurally, I’m thinking it might be wise to — in the long-term — take a look at the way the Fed’s board is chosen and determine if it is even possible for them to balance inflation and employment as dual mandates, and how the Fed is incentivized.

      Not sure it’s working as intended, so to speak.Report

  3. Robert Greer says:

    Milton Friedman has always gotten criticism from the right for not being skeptical enough of macroeconomic tools. These criticisms are in many respects more consistent with the Right’s economic philosophy than Friedman’s. You’ve certainly scored a rhetorical point here, Elias, but unlike the rest of your posts lately, this one doesn’t quite strike at the heart of the matter.Report

  4. James K says:

    In my mind the possibility of monetary stimulus is the best argument against fiscal stimulus. The Fed claims it’s out of ammo, but it looks like they have a few boxes left. For one thing they could stop pay interest on bank reserves.Report

    • Plinko in reply to James K says:

      I can’t figure out a reason why we keep paying banks to keep money out of the economy right now outside of our preference to guarantee income for banks. As long as they insist on keeping that going, my expectation of any kind of further policy action from the Fed are pretty much nil.Report

  5. MFarmer says:

    Holding Friedman up as a conservative hero who should be listened to ignores the actual performance of conservatives in power, even Reagan. Government spending and government deficits grew under Reagan, and inflation continued to steal wealth — Bush accentuated the conservative governance failures for which we have people like Friedman to thank. Both conservatives and progressives have called for Fed action and government interventions, and Fed actions and government interventions have led to a seized-up economy , so we need more Fed action and government interventions.Report

  6. Ryan Noonan says:

    Mapping views on monetary policy onto the left-right axis seems like kind of a category error to me. There’s some orthogonal axis that has inflation hawks and doves on either end. And, while there is generally some correlation, I wouldn’t say it’s necessary.

    Anyway, trying to talk about monetary policy like this only encourages our national pastime of politics as bloodsport, and it only encourages people like Tom.Report