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Here is another quote from Hayek: "I agree with Milton Friedman that once the Crash had occurred, the Federal Reserve System pursued a silly deflationary policy

by evanpw 11y ago

Here is another quote from Hayek: "I agree with Milton Friedman that once the Crash had occurred, the Federal Reserve System pursued a silly deflationary policy. I am not only against inflation but I am also against deflation. So, once again, a badly programmed monetary policy prolonged the depression."

nickff 11y ago
Eugene Fama once countered Freidman by pointing out the fact that (according to Friedman's data) the US banks had massive free reserves during the great depression, but they were not making loans, thus it is not clear that the Federal Reserve had anything to do with the deflation (or could have done anything about it). According to Fama (as the conversation was in private), Friedman neither refuted the argument, nor did he admit he was wrong.[1] [1] http://www.econtalk.org/archives/2012/01/fama_on_finance.html http://www.econtalk.org/archives/2012/01/fama_on_finance.htm...