Bernanke and Friedman: BFFs

Friday, April 24, 2009
Here's a little-known fact.

Federal Reserve Chairman Ben Bernanke has based his entire economic recovery plan on the writings of a libertarian luminary, Milton Friedman - pictured below with sheets of Ones.

Friedman is maybe the most influential economist since Karl Marx. He helped engineer capitalism in the United States, Britain, Russia, and even Iceland.

In 1963, he published "The Monetary History of the United States," a revisionist tome that forever changed America's apperception of the Great Depression.

Up to that point, the 1929 market crash had been viewed as a problem of speculation and overproduction. Of course that implied flaws in capitalism.

"Monetary History" absolved capitalism and shifted blame onto the Federal Reserve. Friedman argued that the Fed had turned an ordinary recession into a depression by raising interest rates and tightening the money supply.

Current Fed Chairman Ben Bernanke is a scholar of the Depression and a zealous promulgator of Friedman's theories.

In 2002, he spoke at Friedman's 90th birthday bash and issued this apology on behalf of the Federal Reserve:

"I would like to say to Milton Friedman... regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again."

In "Monetary History," Friedman spelled out a government plan for averting future depressions. Here it is: drop interest rates, buy corporate bonds, lend to the banks, and print money to keep inflation going.

Like a perfect disciple, Bernanke has implemented each of these prescriptions to the tee - and to the tune of over $12 trillion. Interest rates are at zero and the Federal Reserve is now the chief buyer of corporate bonds. The banks are being shoveled up to $100 billion a week and the printing press is running at full steam.

In the face of this incredible profligacy, some have accused Bernanke of liberal, Keynesian tendencies. A libertarian would never wildly expand government, waste tax money, and intervene in the market. Only a Keynesian would!

In fact, Bernanke's infamous moniker - "Helicopter Ben" - came about when he quoted Milton Friedman on the need to rain down cash on Wall Street in the event of deflation.

Testifying before Congress this year, Bernanke told Ron Paul that Friedman is the guiding light for the Federal Reserve. The matter was sealed at a dinner in Orlando this week (which I attended), where former Federal Reserve Governor Randy Kroszner informed an audience of libertarians that the recovery plan 'is entirely consistent' with Friedman's wishes.

As dictator of the Federal Reserve, Ben Bernanke has faithfully transcribed Milton Friedman's depression-prevention model into reality. Trillions of dollars are allocated in line with his academic theses.

So stop calling Bernanke a Keynesian. He's a Friedmanite.