How Milton Friedman helped the U.S. economy

Milton Friedman was born in New York City. He is indisputably one of the finest

twentieth century American economists. Together with James Buchanan, Milton Friedman was

a student of Frank Knight. He was also influenced by Adam Smith among other great nineteenth

century economists. Friedman taught at the Chicago University for more than thirty years. He

was a Nobel Prize winner. I have chosen him because he was a believer in a free market system

that is in alignment with my liberal market orientation. As the head of Chicago School of

economics Friedman substantially swayed the research plan of the economics profession

(Skousen 407). He is particularly popular for his incredible research monetary theory and

history, as well as, consumption that continue to guide and influence the management of the U.S

economy. He also contributed immensely towards the analysis and understanding of

stabilization policy.

His contributions started with reanalysis of the consumption function during 1950s.

During the same years, he became an influential opponent of activist Keynesian public policies.

During the late 1960s Friedman argued that his approach to economics, as well as, that of other

mainstream economists was using Keynesian apparatus and language but it was rejecting his

original conclusions (Davis 128). He advocated for an alternative macroeconomic policy

referred to as monetarism and argued that there existed a natural level of unemployment and that

increasing employment above that rate only risked making inflation to accelerate.

He was an influential economic adviser during President Ronald Reagan’s government.

Just like Adam Smith, whose economic and political thoughts changed not only the Western

economies but also the entire world, Friedman believed in a free market system with minimal

government intervention. His role in removal of the U.S conscription was one of his greatest

accomplishments. His economic ideas regarding monetary policy, privatization and

deregulation and taxation substantially swayed government policies particularly during the

1980s. Recently, his monetary theory swayed the way Federal Reserve responded to the

2007/2008-2011 global financial crisis. Friedman believed that, a central control of the money

supply like Federal Reserve should use a mechanical system that gradually increases money

supply.

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