This man’s wisdom is more relevant today than ever! He wouldn’t know whether to laugh or cry if he saw where we are today. Must see TV are the episodes of Phil Donahue with Milton. His protégé has become quite the force of nature as well, Thomas Sowell.
@@Frontslash123 The money supply alone cannot cause inflation if there is no impact on the value of the currency he always blalmes goverment never the private sector
0:56 Begins 17:08 3 reasons why we have inflation and why it's a threat: #1 to pay for government expenses 18:03 Real tax is what the government spends 18:35 Inflation is a tax 19:51 Bills are receipts on taxes you've paid. Bills are tax receipts. 20:53 When you "deposit" in a bank, they loan your money 21:20 Think of it as printing money 21:46 Inflation raises other taxes without people having to vote 21:58 You might think if prices go up by 10% and your pay goes up 10% you're even, but you might pay more if you reach higher tax bracket 23:15 Government repudiates its debt. Debt gets smaller as % of national income. Their deficits are financed by inflation. 26:04 Creation of money to finance government expenditures 26:30 When unemployment creeped up, government spent and printed more 27:39 From 1929 to 1933 the quantity of money decreased by 1/3rd (Great Depression) 28:38 Trade unions aren't responsible for inflation. Higher wages are a result of inflation, not a cause of it 29:44 Before 1971 inflation could be exported/imported 32:25 Productivity is important to raising standard of living, but lowers inflation 33:25 The determinant of inflation is the quantity of money 37:30 During past 30 years, inflation paid off mortgages and government debt 37:58 Inflation causes great prosperity and great distress 39:40 Unemployment is not a cure for inflation, but it's a side effect of the cure 40:41 Slow growth and high unemployment to slow inflation 41:49 When demand goes up everywhere, although you may be selling/profiting more (if you own a business), you'll also have to pay more everywhere else, (so you aren't really better off in terms of purchasing power) 42:22 More money takes about 5 to 6 months for people to save and spend, then another 12 to 18 months for inflation results 46:44 Government indexes its own salaries but not the taxes imposed on citizens 47:44 High inflation will lead to high unemployment. Wage and price control (fixation) is supposed to inflate, not fix (though it's promoted as a fix) 50:38 Since 1960, up and down with inflation, but keeps getting higher progressively 53:50 Increased money supply increases inflation 54:30 We've paid the price of stopping inflation but haven't gotten the benefits, because government continues printing once inflation starts to slow 55:08 We don't have good options anymore (either get a recession or have super high inflation) 57:28 Inflation is a disease 58:27 Questions begin
Everyone wasting their time watching the left and the right duke it out on CNN and Fox news. People need to educate themselves watching videos like this. Old Uncle Mitlon is a beast of a lecturer. This is real education here. 🔥🔥🔥
agreed....but as friedman has said the educational system isn't up to par.....you need to have some intellectual basis beforehand and an open mind to truly grasp his ideas
He certainly had swagger. He certainly made economics cool. Do you want to discuss what the "Chicago School"'s idiocy has done to this country from the standpoint of practical reality and actual effect? In my opinion, it's several hundred thousand folks a year thinking the way you do that have given complete and utter control of, essentially, everything, to the federal reserve institutions this man claims to rail against. Do you want a list of folks who "make some good points" whose behavior also actively enriches those who are clear enemies of those populations they claim to represent? (He demonizes Jesse Jackson elsewhere while constructively doing the exact same thing). This man uses a lot of "illustrative" examples about sugar beets and tariffs involving sums on the order of cents, amounts that affected persons' personal well being on the order of tenths of percents while ignoring stealing of the exact same nature occurring in the credit markets during the time that he was prolific and "an authority," yet mysteriously based upon the exact same premises and principles, yet somehow he failed to fashion a hypothetical involving sums that would have actually affected quality of life. Weird. Everything this man said from, like, 1980 or thereabouts forward, i.e, after he "wised up," was fake news and a "spin job" on what data might actually reveal about the interplay between monetary policy and the underlying fundamental presumption of all economic theory, i.e. that "rational actors" were ever a real thing (as defined in economic terms) and are actually a creature extant in significant numbers sufficient to warrant reliance upon mathematical modeling in this regard, well, I think this gentleman died about two years prior to being outed as either a fraud,or, at the very minimum, one who should have done more diligence with respect to the quality of their underlying assumptions.
I mean, I hope you're not suggesting that he's brilliant merely by pointing out how inflation works. See below. Yep, the gov't doesn't take responsibility for inflation, but neither does he take responsibility for espousing anarchy, which has actually resulted (and with government's help, no less).
Well spoken and executed! I'm non partisan and I don't usually agree with his philosophy, but Mr. Friedman is probably my top 5 American intellectuals to ever set foot on earth
Friedman is sharp but he was always dancing on eggshells carefully avoiding putting the blame where it fully belongs because he knew and feared to do it for his life and career. He came close a few times in his career. An hour long talk on inflation and not one mention of the crime of fractional reserve banking? It is the mechanism by which money is multiplied! Wow...just wow...
Notice the duplicity of the state educators in Michigan and California/corrupotifornia. Both states had balanced budget bills that were defeated because the educators opposed them. Educators are supposed to be teaching ethics and morality and setting examples and yet they sided with the "Dark Side" that opposed economic honesty.
Teachers Unions are probably the biggest threat to America’s future. The only thing saving us is are skilled immigrants who are the smartest of their countries, if were being honest. The average American is getting a shit education and being taught that the system is out to get them.
As Friedman correctly notes, in the long run, homeowners benefit from inflation vis-a-vis long-term mortgages which effectively cheapen over time. Another important yet overlooked point many inflation critics miss is that inflation is necessary to account for market expansion. As the relative value of currency falls, people seek to spend or invest their money to avoid "depreciation", this in turn spurs economic activity. Supposing a system had little inflation or perhaps even deflation, in such a system, people would presumably seek to hold their money for as long as possible as it would be appreciating; the velocity of money would in turn slow, as would economic growth. Can anyone explain why reasonable levels of inflation i.e. 2% aren't beneficial for long term economic expansion?
The highest earning county even after all of these years is still in in Virginia and is described as a “Suburb of Washington DC”. Although now it is Loudoun instead of Fairfax.
Insightful video. I just want to know best how people split their pay, how much of it goes into savings, spendings or investments. I'm 27, and earn nothing less $150k per year, but nothing to show for it yet.
Breathe slightly easier that Bernie bowed out of the presidential nomination race. That said, we still have real problems ahead with hyper inflation if government spending is not reduced to balance, let alone pay off some debt.
Well Bernie is only saying to prioritize spending, as why continue to spend almost 1 trillion a year in the military. No body questions that spending you know.
First time I’m hearing of Milton Friedman, yet 45-years later and his teachings here couldn’t be more relevant for today’s economic environment. The guy was dropping straight facts & gems 💎 Shoutout @IanDunlap aka ‘The Master Investor’ for the watch recommendation 🔮🔮🔮 Big love to the Red Panda Family, 🔴🐼 LET’S GO!!! 38:46 - “Everybody wants to stop inflation, at somebody else’s expense!” 53:06 - “The quantity of money, defined to include the currency in your pockets, and all deposits at commercial banks, demand and time, has come to be known as M2 […] And it was that, that was responsible for the tapering off of inflation.” 59:54 - “The way you solve things is by making it politically profitable, for the wrong people, to do the right things!” 1:11:52 - “Keep your eye on one thing and one thing only, how much the government is spending. Because that’s the true tax!” 1:24:20 - “Almost every economic proposition has the following characteristic; what’s true for the individual, is opposite for what’s true for everybody together.” #redpandaacademy #redpandastockclub
It's been clear that during the past 10 years or so the amount of money (and credit) per output as been raising as well as government spending, both in UE and Europe. Why is that we have enjoyed a period with such as low levels of inflation too?
Great question. It's all, primarily, in asset inflation. Most people think of inflation as only goods and services inflation. Inflation is the price of anything going up. The typical measure of inflation reported on and which central banks use does not include the price of assets, though it used to include it. Today we have historically high asset inflation. We have historically high property prices in many cities. We have an historically high stock market (notwithstanding the Covid shock). Bond yields are at historical lows - some government bonds are even negative. Yields are driven down as the price of bonds go up. If we included assets, inflation is running at an extremely high rate. Many people are victims of inflation today, just as they were in the 70's - those WITHOUT assets. Those WITH assets are the beneficiaries. For example, from the perspective of a young person just starting their career, or low income earner trying to buy a home, the ratio between average income to average house prices has widened considerably. It is much more burdensome to buy a home today on an average salary than in the past. The fact that we don't have goods and services inflation in the real economy indicates most of the money created from QE and fiscal stimulus since the GFC, has overwhelming settled at the very top end of society. Providing 'liquidity' to banks in the financial sector, large corporations and the general investing class have only led to historical high asset inflation. One mechanism by which this happens is via share buy backs. Companies in America have been increasing considerably their rate of share-buy backs, where the company purchases back it's own stock, driving up the price, and company managers are rewarded with performance bonuses. Thus inequality widens in America and many other countries around the world. We can expect even further record breaking asset inflation from the Covid stimulus. Either this, or the great financial and debt bubble of the 21st century will finally reach it's limit and burst. T
It was brilliant, but hasn't mentioned anything about the velocity of money. Only about the quantity of money. But no matter if big quantity of money, if velocity is very small, you won't get inflation. What we living now.
I don't believe that people who invented that many things being creative and inventive so much they can't invent system which will satisfy all of us. Its just greediness and commonness of people.
I thought inflation was caused by the practice of usury. As the interest is logistically impossible to payback, the printing of money is inevitable to keep an economy going. How come he hasn't mentioned this?
Because one needs to account for the actual increase of goods and services available in any particular economy. If no money is printed but the economy grows ( I.E. more people, more resources, and more transactions), you have deflation and there is less money chasing more goods and services. The ideal is to have a money supply that is appropriate for the goods and services available so that prices remain stable. The problem is when government attempts to influence the economy by manipulating the money supply instead of adjusting the money supply to match the size of the economy.
rogueartist2008 With all due respect that doesn’t really address the fact that usury and the nature of it is what makes inflation a necessary evil. If interest cannot ever physically be repaid then more money will need to be pumped into any given economy.
@@concerned1 That is not entirely correct. Inflation is not NECESSARY because of usury. Debt can be repaid without inflation if money is continually flowing through an economy, which is why loans are paid back over time via installments. All that needs to happen for the loan to be repaid is for the person who took out the loan to possess enough money to make the required monthly payments until the loan is repaid in full. This does not require inflation, however, it does require a continual flow of money through the debtors hands. This becomes problematic when economies grow (I.E. more goods, more services, and more people) and the money supply is not increased to keep prices stable. If an economy grows and the money supply does not grow in turn, you have defacto deflation, which causes people to hoard money, which causes decreased money flow, which causes loan defaults, which causes economies to stall in a perpetually vicious cycle. So to address your point more clearly, usury DOES NOT necessarily equate to inflation. And furthermore, inflation is good in a growing economy and deflation is good in a shrinking economy; The ideal, as I stated earlier, is price stabilization. When the government manipulates the money supply to "stimulate" the economy is causes the price distortions that end up exacerbating the problems it is attempting to avoid.
@@rogueartist2008 ... I followed your argument except why would deflation cause people to hoard money? It seems to me, most of our spending is on things we need (food, soap, shelter, etc.) and we still need those things even if the price is lower due to deflation. I think if people had more money bc things cost less, they might save some, but they would also pay off more debt, which is a good thing. American consumer debt is now $20T. It would be healthy to pay that down.
🧡💛💚💙 When governments print money, its like the hangover from alcohol. The good effects come first. The very bad effects come later. 2020-2030 needs Bitcoin + Gold as portfolio safety 🧡💛💚💙
If this is the case, and I think one could be made, then Friedman made the same error that our founders likely made. They may have assumed that future generations would remain as informed and be able to critically think as well as they did. Sadly, this is not the case, generally speaking.
He's part-right. Yes Inflation is a monetary phenomenon. Where he's wrong is the vast bulk of new money is't created by central banks but private ones, who lend money that doesn't exist into existence... money which can then be used as a base from which to create more money. This only comes to an end when there's no one willing to borrow or lend. When that happens, we realise there is actually more debt than money to pay it. I think Central Banks (for once) aren't the bad guy here. They are needed to print the difference because without it, we would try to pay off $1trillion worth of debt with $1billion worth of money. If I lend you $100 that doesn't already exist and you owe me $110 due to the interest, I've created $100 of new money and $110 of debt. If you realise that 90% of our "money" comes from this source, you have to realise it is impossible to pay our debts. So new money is necessary. This is why we haven't seen anything like the Inflation of the 70s or 80s in recent years, in spite of record money printing by the FED and every other central bank.
Neoliberal ideology has twisted the meaning of "free market" into the opposite of what the classical economists like Adam Smith intended. The classical economists defined a free market as free FROM economic rents (unearned income), extracted by feudal landlords. The classical role of government is to tax away economic rents and use it to lower the cost of production. This is done by keeping natural monopolies in the public domain, and through subsidies for such things as public infrastructure, education, and health care, not raising the cost of living and therefore the cost of labor, as with monopolistic privatization. Austrian and Libertarian neoliberals have no role for the government in the economy, leaving the market free FOR economic rents, extracted by monopolies and the banks (FIRE, finance, insurance, and real estate). Because the economy does not stay out of government, the result is rule by the rentier oligarchy, otherwise called feudalism. The crown jewel opportunity for rent seeking is banking, and we will not have progressed out of feudalism until it is a public utility. At the dawn of the twentieth century, the application of classical economics combined with advances in technology led people to believe that a golden age of human progress and prosperity was approaching. But the reactionary rentier class used its rentier fortunes to launch an economic “Counter-Enlightenment.” As Michael Hudson summarizes, To deter public regulation or higher taxation of such rent seeking, recipients of free lunches have embraced Milton Friedman’s claim that There Is No Such Thing As A Free Lunch. [. . .] The actual antidote to free lunches is to make governments strong enough to tax economic rent and keep potential rent-extracting opportunities and natural monopolies in the public domain. The point here, articulated by Orwell, is that technological progress in production and in economic planning should have ushered in a golden age of civilization. Instead, activist elites recognized the implications of this dynamic and responded by using their wealth and power to maintain the inequality and material insecurity that are preconditions for their continued dominance over society. Good, Aaron. American Exception: Empire and the Deep State (p. 180)
But doesn't his idea about the cause of inflation being hightened money supply only accur if, in addition, ... a) The money surplus is also used to aktually buy goods b) The prices are actually raised by market actors ... ? His explanation seems pretty onesided to me and more driven by ideology than argument.
I live in Argentina who took road of free lunch, public spent and socialism long time ago. Our inflation rate is 3000% over the past 10 years. We facing a major economy breakdown every decade too. Our poverty is +50% and rising. Im 45 and already experienced 3 hiperinflations and two social uprisings (the 3rd is coming soon). Never, never take the free lunch socialist road. It has hell at the end.
Robert Osborn yes, when foreign countries decide to stop paying their debts in dollars back, or commodities like oil stop trading in dollars. Both of which our military is there to prevent.
@@MIKESTREED when you say foreign countries pay their debt. Do you mean debt to U.S companies or debt to U.S Gov't? Or both? Elaborate please (for ex. Why do foreign countries owe the U.S Gov't?)
Fuck Friedman, Hayek, the Mont Pellerin Society, the Chicago Boys, and the entire failed neoliberal project- and fuck all the deluded sociopaths still buying into it. Wake up already. IT DIDN'T WORK.
To control inflation we need to control de Money Supply. At the year 2013 was discovered The Progressive Growth of Money Supply Principle, which say you how much the Money Supply must growth, i.e., the quantity of money that markets needs: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-iiKr-i022mY.html Once the Fractional Reserve Banking is forbidden, if the Central Bank increases the money supply by an amount equal to the sum of interest generated by the financial system during the preceding period, the market interest rate will be the natural interest (Wicksell) and we won't have bubbles (tulips, gold, stocks, etc.) and crisis. Thanks to the Progressive Growth of the Money Supply Principle we know today that it is impossible to return to the Gold Standard. The Principle will force Central Banks to change de monetary policies.
We're already feeling the good effects now, businesses can get through short term losses, wages subsidised (up to 80% in the UK I don't know where you are from). Then we get through the lockdown, businesses start reopening and trade resumes, but the downturns are coming unfortunately. One problem after another.
Funkle D The great parliamentarian Enoch Powell even espoused the economic truisms before Milton but Milton received the Nobel prize but I believe Milton did write and acknowledge Enoch Powell’s input Enoch spoke 14 languages brilliant man much misrepresented by gutter press and people
My thoughts exactly. He is saying never have we seen an increase in money supply without inflation. If that’s the case what would he say about 3 trillion that was just printed? Granted we are seeing it in asset prices. But not how I think he defines inflation. Such as CPI
Just as relevant today in 2023 as back then, when this was recorded…Except, its not just government in this inflation, albeit indirectly. It’s been a new mistake (as MF mentioned), Country banks have raised teh quantity of money in their countries all the while satisfying teh politicians want to creating more housing for their voters. Less public housing, and more private investment housing….where did all the money come from? For Australia, Canada, NZ…America….mostly comes from banks taking in loans from short term money markets…especially in Europe where interest rates are 0 or less (neg), and/or China being productive plus money printers in the aim of keeping their currency manipulated to be attractive to all the worldwide consumers who buy their products. All these countries with way way over priced huoses, also see their quantities of money quadruple in the last 20 years…all the same time that Europe banks low rates, China manipulate their currencies AND each of these countries (suffering inflation) have seen their governments trying to be market makers in housing. This is trictly western, developed countries…the under developed countries will have their own unique flavour of inflation. But 1 thing is for sure amongst the Anglo sphere..the private banks in step with their wonky politicians (who mostly have multiple housing themselves) have rightly abused their printing press (not treasury), by ways of indirectly but yet explicitly saying and confirming that their banks are “pillars of society”…meaning they will not (in their mind) and CANNOT fail. Just means inflation is here to stay…the quantity of money will rise and we WILL NEVER default…we will just print more money via teh central banks and not allow anyone to fail, nor go through the experience of having to request a saviour monetary loan from the discount window. All bets are off for prudent management…we refuse to accept failure. Throw in credit cards and all other kinds of derivative products to get consumer spending…then the financial wizards at these banks (fully endorsed by govts) will only ensure inflation periods will last longer. Extension of credit to purchase products will be on the decline (in number) will allow prices to go to a level that makes the govt backed money meaningless. It can never be converted by choice (with freedom)… no, todays world has changed much from MF time with this speech…there are new mistakes being made…but his rock solid fundamentals seem to be ignored….truly amazing. Some people await the second coming of Jesus….right now, we need the second coming of MF.
It’s funny listening to these things from the late 70s knowing Reagan would be elected a year or two from then. Friedman’s point about people finally waking up to what is going on was realized in that short period of time.
