![]() The Federal Reserve Bank was created in response to the problems Friedman cited as evidence for the impracticality of the gold standard. ![]() For example, banks might refuse to provide customers gold when they try to redeem deposits.įriedman continues by explaining how, in his view, the Federal Reserve Bank of the United States contributed to the severity and duration of the Great Depression (1929–39). He supports this by noting the numerous problems caused by gold-standard money in the United States from 1879 to 1913, including several severe financial crises. He argues against a total commodity standard and in favor of a mixed standard that heavily features government-managed fiduciary money. Friedman discusses the relative merits of standard money, the value of which is backed by commodities like gold, versus fiduciary money, the value of which is determined by people's confidence it will generally be accepted. The first issue concerning the control of money is what standard should determine its value. Referring back to his general view about the purposes of government, Friedman argues the extent to which government should be involved in the regulation of money is only to provide a stable framework for private individuals and groups to engage in free exchanges. ![]() In each case, Friedman says free-market capitalism is feared to be too unstable and unable to sustain a constant rate of economic growth. This chapter begins with an overview of the reasons why people give the government control over issues concerning money, spending, and international trade. ![]()
0 Comments
Leave a Reply. |