Economic: Milton Friedman and Money supply Essay

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Milton Friedman

Milton Friedman, was born in July 12, 1912, in Brooklyn new york. He came from a Jewish

Family and became economist, statistician and a writer. He attended Rutgers University, where

he earned his B.A. at the age of twenty. He went to earn his M.A. in the University of Chicago in 1933.

and his PhD in 1946, from Columbia University. At the age of 40 he was award with the John Bates

Clark Medal honoring economists, which is an outstanding achievement in the economic field.

Been a professor at the university of Chicago for more than 30 years, he also was a recipient in

the Nobel memorial prize in 1976. Milton played a 3 roles in the intellectual life of the 20th century.

There was Friedman the economist’s economist. Milton the policy entrepreneur, who spent decades

campaigning on behalf of the policy known as monetarism, and last seeing the federal reserve adopt his

doctrine at the end of the 1970.He is know for his research on consumption analysis, monetary history

and theory, and the complexity of stabilization policy. He was the second most popular economist in

the 20th century. He had many achievements, he did his land mark in 1957, with the theory of the

consumption, in capitalism and freedom. He wrote one of the most important book of economics in the

1960 a so on he retire at the age of 65 from the university of Chicago. In Capitalism and Freedom. Theory of the Consumption Function: Milton contributions to economic theory are many.

One of his primal described in a theory of the Consumption Function in the year 1957, and it was the

articulation of the permanent income hypothesis He took on Keynesian point of view. Milton argued

that the best way to make sense of saving and spending was not, as Keynes had done it. that house

holds and individuals adjust their investments on consumptions to reflect their current income. Milton

show that Instead, people annual consumption is a function of their permanent income, but rather to

think of individuals as making rational plans about how to spend their wealth over their lifetimes. Also

Milton permanent income hypothesis and the Aldo-Modigliani life cycle model fix several apparent

paradoxes about the relationship between income and spending. Also is still the main foundation of

how economists think about spending and saving to this day.

Monetary history and theory. Although much of his innovative work was done

on price theory, the theory that explains how prices are determined in individual markets. Milton is

popularly recognized for monetarism. Confronting Keynes and most of the academic establishment of

the time, Milton presented evidence to resurrect the quantity theory of money the idea that the price

level depends on the money supply. In Studies in the Quantity Theory of Money, released in 1956,

Milton stated that in the long run, increased monetary growth increases prices but has little or no effect

on productivity. In the short run, he argued, increases in money supply growth cause employment and

productivity to increase, and decreases in money supply growth have the opposite effect. Monetary is

the set of views associated with modern quantity theory. A Monetary history of the United States in

1963, which was an examination of the role of the money supply and economic activity in the united

state history. A remarkable conclusion of their research was respecting the way in which money supply

fluctuations are contributing to economic fluctuations.

Inflation: economists use the term “inflation” to show an on going rise in the general level of

prices quoted in units of money. The weight of inflation the
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