tag:blogger.com,1999:blog-17232051.post6226429480265076882..comments2024-03-28T03:16:14.104-04:00Comments on Noahpinion: How are Milton Friedman's ideas holding up?Noah Smithhttp://www.blogger.com/profile/09093917601641588575noreply@blogger.comBlogger29125tag:blogger.com,1999:blog-17232051.post-60548960058296632202017-02-20T17:24:26.421-05:002017-02-20T17:24:26.421-05:00This is the most coherent analysis of Milton Fried...This is the most coherent analysis of Milton Friedman I have ever read. Good work Noah Smith. I'm inspired to do this type of analysis for more theories just to figure out what my macroeconomic beliefs are!Alex Peekhttps://www.blogger.com/profile/16599952608457953713noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-85574266001436566032016-09-06T06:05:17.226-04:002016-09-06T06:05:17.226-04:00My rule of thumb is that any Friedman hypothesis i...My rule of thumb is that any Friedman hypothesis is wrong - the problem is that it can be very difficult to prove this.<br />Friedman test is not a macro hypothesis so should really not be in this list (and I was not aware of it until now).Xenushttps://www.blogger.com/profile/09766757828371573752noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-38142011375725316352016-08-29T12:34:38.916-04:002016-08-29T12:34:38.916-04:00No worries at all. :-)No worries at all. :-)Noah Smithhttps://www.blogger.com/profile/09093917601641588575noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-56626312815566868162016-08-28T21:48:36.807-04:002016-08-28T21:48:36.807-04:00I was new to the blog when I posted that. I enjoy ...I was new to the blog when I posted that. I enjoy your blog and am sorry for posting that. Didn't realize till flipping through earlier posts your mother had passed. It would have been tasteless regardless. I am sorry.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-74910624121453767452016-08-28T17:24:10.259-04:002016-08-28T17:24:10.259-04:00Buchanan committee hearings should be a hint.... ...Buchanan committee hearings should be a hint.... dudlyhttps://www.blogger.com/profile/14706354289214198364noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-18407639948136242432016-08-08T11:21:40.945-04:002016-08-08T11:21:40.945-04:00"managed" exchange rate as instrument of..."managed" exchange rate as instrument of monetary policy has been working well for Singapore for over 30 years. Note that SG has a rate crawl, free capital movement, no interest rate control (tends to follow Fed rates + IRP)<br /><br />http://www.mas.gov.sg/~/media/resource/publications/macro_review/2013/MRApr13%20%20SF%20A.pdf<br />Squeaky Wheelhttp://seekingalpha.com/author/squeeky-wheel/articles#regular_articlesnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-29562412702131252902016-08-08T04:02:58.971-04:002016-08-08T04:02:58.971-04:00Friedman-Savage Utility Function does not deserve ...Friedman-Savage Utility Function does not deserve a B. Generally it is difficult to explain anything with upward curving utility functions. In this specific case, Friedman "explains" the purchase of a lottery ticket at the expense of making it difficult to explain why anyone would purchase just one -- indeed if the shape of the utility function explains why some people play the lottery, we should expect most lottery players to spend all of their income on the lottery or close to it.<br /><br />If you want to explain lottery ticket purchases as a rational sort of behavior, you need to get past the idea that comparing means of distributions of future possibilities is the one true way to rank them. There are other rational ways to make choices under uncertainty and it's not too hard to come up with ways of ranking that result in people buying insurance and a few lottery tickets without resorting to funky utility curve shapes.Eric Lhttps://www.blogger.com/profile/17688525347746547529noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-17336617197802644232016-08-07T23:54:48.015-04:002016-08-07T23:54:48.015-04:00Excellent discussion on his ideas. I recall Paul K...Excellent discussion on his ideas. I recall Paul Krugman also did an overall analysis of his academic work and policy view. While he gave thumbs up his academic ideas, he was very critical if his policies n opinions. Here's the link to his NYT book reviewhttp://googleweblight.com/?lite_url=http://www.nybooks.com/articles/2007/02/15/who-was-milton-friedman/&ei=Og5XutYn&lc=en-IN&s=1&m=770&host=www.google.co.in&ts=1470628281&sig=AKOVD66gZLynRc6wb5ZLzva-Kg2qRiwH3A Santosh Dashhttps://www.blogger.com/profile/02016226999263087762noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-54295913871044647472016-08-07T12:38:02.138-04:002016-08-07T12:38:02.138-04:00Or rather, deleveraging stopped nation-wide and bu...Or rather, deleveraging stopped nation-wide and businesses/consumers began taking on more debt once again.Kainhttps://www.blogger.com/profile/09841689865415250256noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-18941871860387435502016-08-06T20:31:50.275-04:002016-08-06T20:31:50.275-04:00Bravo!Bravo!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-54425748356060471462016-08-05T11:18:00.446-04:002016-08-05T11:18:00.446-04:00I think you touch on the main point nicely at the ...I think you touch on the main point nicely at the end.<br /><br />Friedman was a catalyst. <br /><br />His ideas, like the vast majority of ideas in economics, are intermediate inputs that seek to explain the times and be built in by those that follow. Much in the same way most great macroeconomists deserve to be thought of in the same way.<br /><br />Friedman, in 1976, sought to build on the knowledge base and explain the economy of 1976. In that context, and as a catalyst for those that followed, he was and is a titan. Scipio Australishttps://www.blogger.com/profile/11068235906389080432noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-66590170115523866532016-08-04T06:27:22.648-04:002016-08-04T06:27:22.648-04:00I think the failure of the PIH to match the data h...I think the failure of the PIH to match the data has a lot to do with borrowing constraints. If you are unable to borrow money against future income, and your income is currently lower than what you expect it to be in the future, you will become a hand-to mouth consumer automatically. Of course this does not solve all the empirical problems with the PIH, but it is a simple and persuading way of making the theory more robust. Your failure to mention this well-known fact makes your comments about the PIH seem biased.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-44515578892445407302016-08-04T02:22:59.082-04:002016-08-04T02:22:59.082-04:00Just a note on your Bloomberg piece (I don't f...Just a note on your Bloomberg piece (I don't feel like signing in over there), buying furniture, or any other durable good, does not invalidate the PIH. If I get a tax cut windfall and go out and use it to buy a car, my present consumption does not actually go up - from the point of view of the theory - by the value of the car. It only goes up the per period stream of services that the ownership of a car delivers.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-84053458081954335732016-08-03T10:11:31.253-04:002016-08-03T10:11:31.253-04:00If your conviction in a given monetary theory is l...If your conviction in a given monetary theory is low, then shouldn't point 6, an assertion about fiscal policy, reflect correspondingly low convictions? It doesn't seem possible to measure fiscal effects without baking in monetary effects.Anoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-74587876633712164382016-08-02T21:49:25.261-04:002016-08-02T21:49:25.261-04:00I think your assessment of Friedman's contribu...I think your assessment of Friedman's contribution re: Floating Exchange rates is harsh. I think the main goal of economic policy-making should be to avoid prolonged periods of mass unemployment. In that regard, the experience of the US and the Eurozone provides about as good a controlled experiment that you can ever hope to get for Fixed vs. Floating exchange rate regimes. The fact that the US got out of the '08-'09 slump as quickly as it did whereas Europe continues to languish provides ample proof that floating exchange rates are better. Not sure if one can use China's limited track record to judge the efficacy of fixed exchange rates.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-33080965852430520252016-08-02T19:04:14.339-04:002016-08-02T19:04:14.339-04:00Your approval of the headline "Economists Giv...Your approval of the headline "Economists Give Up on Milton Friedman's Biggest Idea" is misguided. Yes, as you say, the strong form of the PIH - perfectly forward-looking consumption smoothing seems unwarranted. <br />But this claim should not be taken as a criticism of Friedman. His book was subtle and often referred to uncertainty. His concept of transitory income itself reflects uncertainty - look at Figure 2 (p.24). It would be hard to read “perfectly forward-looking consumption smoothing” into his book. Consider the following:<br />"Future measured income is uncertain. The scatter of dots for later ages is intended to represent the possibilities as viewed by the unit: for each future date, there is some anticipated probability of measured income…..[T]his scatter diagram seriously misrepresents the situation in one important respect. It suggests that the probability distributions are independent, whereas in general they might be expected to be interdependent(p.20)."<br />This is hardly the stuff of “perfectly forward-looking consumption smoothing.” You might amend your grade after a careful reading of his book. <br />Your claims “A mortgage doesn't entail taking on net debt, since the value of the loan is the same as the value of the asset you acquire” and “And education is generally regarded as investment, not consumption” both reflect a misunderstanding of the PIH.<br />Freidman undermined the Keynesian theory of consumption by arguing that the target of the Keynesian theory –consumption expenditure – is lumpy, erratic and hard to explain. Rather PIH tries to explain the flow of consumption services –services, non-durable goods and the flow of services from durable goods – rather than consumption expenditure. <br />Your argument that the value of the loan equals the value of the asset has absolutely no bearing on the PIH. The purchase of the house is not part of Friedman’s consumption measure. The purchase was an expenditure that enabled the person to enjoy a flow of consumption services –Friedman’s measure - now and over the future. <br />Many of the critiques of Friedman’s consumption theory make the same mistake. The lottery winner buys a new car. But that’s focussing on the expenditure. The car will provide consumption services over more than the current year.<br />Again your argument that “an education is generally regarded as investment, not consumption (though some might argue)” also misses the point. Sure, some of the borrowing does finance the investment. But some pays for the student’s current consumption. The loan enables the student to smooth consumption by financing it by future income.<br />It is easy to criticize caricatures of Friedman’s PIH. But it still influences on current approaches to explaining aggregate consumption. And this is, contrary to the claim – which you approve of - that economists have given up on Friedman’s biggest idea. <br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-88667200907731654542016-08-02T18:15:49.868-04:002016-08-02T18:15:49.868-04:00Funny, I hardly recognize Friedman's ideas as ...Funny, I hardly recognize Friedman's ideas as Noah presents them. Unlike when this economist does it;<br /><br />http://www.bradford-delong.com/2016/04/hoisted-from-the-archives-from-fifteen-years-ago-the-monetarist-counterrevolution.html<br /><br />-------------quote-----------<br />My conclusion is simple. Much of the history of macroeconomic thought is often taught as the rise and fall of alternative schools. Monetarists tend to write of the rise and fall of Keynesian economics--its rise during the Great Depression, and its fall in the 1970s under the pressure of stagflation and the theoretical critiques of Friedman, Phelps, Lucas, Sargent, and Barro. They tend to see this as the rise "interventionism" and then its decline and replacement by a more hands-off view that holds that monetary policy should be "neutral." Keynesians write of the rise and fall of monetarism--its rise during the monetarist counterrevolution, its fall as the instability of velocity and the money multiplier became clear, and its replacement by the modern "new Keynesian" paradigm.<br /><br />Neither story appears to me to give an accurate or even a particularly useful vision of how it really happened. The fall of monetarism as a political doctrine was coupled with the victory of "monetarist" ideas and ways of thinking in the mainstream: that was the point of DeLong (2000). And what Friedman and Schwartz (1963) would call a "neutral" hands-off monetary policy during the Great Depression--one that kept the nominal money stock fixed--would have been condemned by pre-World War II over-investment theorists as extraordinarily interventionist. Indeed, it would have been. Between 1929 and 1933 the Federal Reserve raised the monetary base by 15% while the nominal money stock shrunk by a third. The position of Friedman and Schwartz (1963) is that the Federal Reserve should have injected reserves into the banking system much, much faster. Sometimes to be "in neutral" requires that you push the pedal through the floor.<br />---------------endquote----------<br /><br />Earlier, DeLong had written;<br /><br />-----------------quote-------------<br />The importance of analyzing policy in an explicit, stochastic context and the limits on stabilization policy that result comes from Friedman (1953a). The importance of thinking not just about what policy would be best in response to this particular shock but what policy rule would be best in general--and would be robust to economists' errors in understanding the structure of the economy and policy makers' errors in implementing policy--comes from Friedman (1960). The proposition that the most policy can aim for is stabilization rather than gap-closing was the principal message of Friedman (1968). We recognize the power of monetary policy as a result of the lines of research that developed from Friedman and Schwartz (1963) and Friedman and Meiselman (1963). And a large chunk of the way that New Keynesians think about aggregate supply saw its development in Friedman’s discussions in Friedman (1970) and Friedman (1971a).<br /><br />Thus a look back at the intellectual battle lines between "Keynesians" and "monetarists" in the 1960s cannot help but be followed by the recognition that perhaps "new Keynesian" economics is misnamed. We may not all be Keynesians now, but the influence of "monetarism" on how we all think about macroeconomics today has been deep, pervasive, and subtle.<br />---------------endquote---------------susupplyhttps://www.blogger.com/profile/14712328565035046516noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-37723256342833229042016-08-02T11:29:33.159-04:002016-08-02T11:29:33.159-04:00Noah, your pithy dismissal of monetary offset of f...Noah, your pithy dismissal of monetary offset of fiscal stimulus is not persuasive. Even Paul Krugman qualifies his arguments in favor of fiscal stabilization by limiting it to when interest rates are near zero. A central bank that can hit its inflation target CAN and WILL offset fiscal stimulus, no?<br /><br />And much of the literature fails to control for monetary policy (i.e. looking only at EU countries that are on the Euro).<br /><br />And do you really believe that the US economy just coincidentally experienced a boost of demand in 2013 at exactly the time that we slid over the fiscal cliff/sequester? Or do you believe that monetary policy had something to do with the fact that growth and employment accelerated in the fact of contractionary fiscal policy? <br /><br />Just because the fiscal multiplier sometimes exists doesn't mean that it couldn't be driven to zero by a competent central bank. <br /><br />And he was obviously correct that Japan's massive deficit spending program was a failure.Samhttps://www.blogger.com/profile/03796339415643845682noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-24767063025829013752016-08-01T22:18:16.846-04:002016-08-01T22:18:16.846-04:00I contest 2 grades. PIH ""But the PIH do...I contest 2 grades. PIH ""But the PIH doesn't say all consumers are perfect smoothers, only that people do some amount of consumption smoothing." is OK if it makes the PI story a non hypothesis. Not so much if "some smoothing" is given a definition consistent with the ordinary English meanings of "some" and "smoothing". I think level 0 for the PI non Hypothesis is that the ratio of consumption to current disposable income is high when the ratio of discounted future disposable income to current disposable income is high. <br /><br />This is not true of the USA. I think there is nothing there. In particular, I think that Friedman's writing on consumption is totally inferior in every way to Keynes's.<br /><br />see (pdf warning) http://bit.ly/Q7rS54<br /><br />I grade PInonH D except for calling it an H while adding weasel words to avoid falsifiability (as Friedman did) which gets it down to F+ (to be generous).<br /><br />On the other hand, I think the adaptive expectations model fits the data extremely well. This is true for a very crude simple form. <br />This is striking and surprising because it wasn't really a hypothesis -- Friedman and others thought it might be a useful first approximation but didn't think it would fit the data as well as it does)<br /><br />Another PDF warning http://bit.ly/1F0fDPz<br /><br />I think that one gets an A- <br /><br />Finally you are not the first economist to ask what the Romans have ever done for us<br /><br />https://mainlymacro.blogspot.it/2012/03/what-have-microfoundations-ever-done.html<br /><br /><br />Roberthttps://www.blogger.com/profile/14455788499385673507noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-3406092013385247402016-08-01T13:52:27.778-04:002016-08-01T13:52:27.778-04:00I was a money market economists in the era where t...I was a money market economists in the era where the Fed was supposedly targeting money supply growth.<br /><br />The perception on the street and among many institutional investors was that the Fed would pretend to target money and that Congress would pretend to believe them. The Fed realized they needed to raise rates extremely high to stop the double digit inflation. So they switched to targeting money supply so they could deny that they were responsible for the high rates -- it s just the markets reacting to the money supply growth. <br /><br />In Boston Frank Morris was the Fed of Boston chairman and he regularly had a little too much to drink a private functions and told tales out of school that he shouldn't.<br />But there were other knowledgeable individuals who provided the same analysis to the investment community.Anonymoushttps://www.blogger.com/profile/00890602912336659845noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-4465210878423415822016-08-01T09:47:38.337-04:002016-08-01T09:47:38.337-04:00There is no doubt that Friedman's importance p...There is no doubt that Friedman's importance pales in comparison to the other three, but actually, surprisingly little of "Newton's stuff" survives in recognizable form in modern classrooms. The three laws were well understood before him (as he acknowledges right after stating them). The mathematical derivations using conic sections in Book I are far too complicated to be taught in high schools, or even a freshman mechanics course. By the time the typical physics student has taken such a course, they are unlikely to encounter the subject again. A thorough belongs in a graduate celestial mechanics text, likely with a completely different approach. His ideas on fluids were much less clear, and are largely forgotten. Similar remarks apply to Kepler and Flemming.<br /><br />Indeed, the vast majority of working scientists nowadays couldn't tell you exactly what it is Newton discovered or wrote (vs. what was later added by Euler and his many other interpreters). They just know the vague outline of some of his ideas, and that they were important. So it is with Friedman, as well.<br /><br />Your remark concerning accounting is essentially self-contradictory: the only reason we have data to check theory against is the careful empirical work of thousands or economists who think about what to measure and how.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-55671817288208423682016-08-01T00:51:22.758-04:002016-08-01T00:51:22.758-04:003) Also Friedman's major thesis of "Monet...<br />3) Also Friedman's major thesis of "Monetary History of the United States" doesn't hold up very well in the face of the Great Recession. Fundamentally, the two causes of the Great Depression, an asset bubble followed by debt-deflation, and the Gold Standard, which not only forced the economy to rebalance to the price of gold, but also made it impossible to run an independent fiscal policy or have a needed foreign devaluation. Friedman kind of ignores that the increase in interest rates during the beginning of the recession was in large part to stick to the Gold Standard, and Friedman ultimately did not understand how the money supply worked with regards to the Central Bank (he believed it to be exogoneously supplied by the central bank, and blamed central bankers incompotence when money targets could not be reached, because he didn't understand that the money supply was endogenous). He has to have some kind of D-C rating here, albeit it's fair to say that monetary tightening did make it worse, and knowing what we now know, government policy of balanced budgets and adherence to the gold standard ultimately made the Great Depression Great.<br /><br /><br />4) It's sort of part of money growth targeting, but as mentioned above, Friedman didn't understand how the money supply, central banks, or banking in general worked from an operational standpoint.<br /><br />Here, it's worth reading Nicholas Kaldor's "The Scourge of Monetarism", which in real-time debunked Milton Friedman's Monetary philosophy of the day, and in the process of writing it came up with an alternative hypothesis of reverse causation, which eventually become developed into endogenous money (which Central bankers like the BoE have confirmed).<br />https://www.amazon.com/Scourge-Monetarism-Radcliffe-Lectures/dp/0198772483<br />(I shudder when I see those prices, given I paid much more for my copy, but oh well. If you really do not want to buy one, I could lend mine)<br />(Also, while we are on the subject of Kaldor, apparently he came up with the Sectoral Balance approach that was later perfected by Godley back in the 1930s and 40s! http://www.concertedaction.com/wp-content/uploads/2012/11/Nicholas-Kaldor-Sectoral-Balances.png )<br /><br />Anyhow, I'll leave it there.Kainhttps://www.blogger.com/profile/09841689865415250256noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-2691511039783600062016-08-01T00:51:14.389-04:002016-08-01T00:51:14.389-04:00A few things:
1) I might rate NAIRU even lower, p...A few things:<br /><br />1) I might rate NAIRU even lower, perhaps a D or worse. Believers in the theory kept on saying throughout the 80s, "the new NAIRU is 6.5%!" well, it went below 6%. In they 90s they said "the new NAIRU is 5.5%" then "5%!" then "4.5%", and yet it went below 4%. It's kind of an idea without basis, and was used primarily to replace the Philips curve, which while it had some significant flaws (supply shocks! like oil shocks). The world, outside of those significant supply shocks, operates in a mostly Philips curve-like way, although today is another diversion from the Philips curve: the Philips curve's internal belief is that lowering unemployment will increase wage growth, which will translate into inflation. Well, that has not happened in this recovery, since in part unemployment was high to begin with (and you could list other factors, like lower power of labor unions, or that much of the drop in unemployment has been to the drop in the participation rate).<br /><br />NAIRU was basically an idea that justified a philosophy that lowering unemployment, or creating "full employment", was a dangerous idea to avoid, and so that the Federal Reserve and other policy makers should instead keep a larger army of the unemployed to keep wages lower.<br /><br />2) I'd give Floating Exchange Rates somewhere around a B. Clearly, in a world with capital mobility (and absent capital controls, see: Mundell-Fleming Trilemma), Floating Exchange Rates are the better policy to pursue than fixed exchange rates. However, managed pegs can work as China has shown, as can managed floats, like Switzerland has done recently. I think the problems inherent in Floating Exchange Rates exist because of Friedman's other philosophy, i.e. the notion that "Trade Deficits Don't Matter", which is us giving other countries a bunch of goods we want for pieces of paper! Which is terribly naive for a variety of reasons (and something that strangely the MMTers repeat as well).<br /><br />On that philosphy I'd give him a D (I'm talking about this one: https://www.youtube.com/watch?v=qJCeoFxrDn0 ). Basic economic formulas say that more net imports leads to less GDP (which can be offset by higher consumption or higher government spending). Sectoral balance accounting basically says that a higher trade deficit means you either need higher public spending or lower national savings (which can also mean more private debt) in order to keep GDP from shrinking from its potential, or, conversely, less GDP.<br /><br />Further, in order to keep BoP straight, you need to receive inflows of capital. That basically involves countries investing in Treasury bonds, which means the taxpayer is effectively paying foreign bondholders instead of paying national savers, or investing in stocks and real estate, which means that you can have stock and real estate bubbles... similar to the ones we saw in the late 1990s and 2000s (and what we somewhat see today as well). All of that may be well and good for owners of assets and capital (who, ultimately, are the ones Prophet Friedman is most concerned about), but it's certainly not good for domestic manufacturers, workers, wages, or people looking to rent or buy homes.<br /><br />Further, if you accept Verdoorn's Law (I know Noah is naturally skeptical to it, since ebil Post-Keynesians like Kaldor contributed to it), then by lowering output, particularly in the export sector, you also lower the rate of productivity, thus lowering the future long-term rate of the country.<br /><br />So, lot's of bad things going on with Friedman's "Trade Deficits Don't Matter" line of thinking.<br />Kainhttps://www.blogger.com/profile/09841689865415250256noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-34819093647374521262016-08-01T00:20:57.682-04:002016-08-01T00:20:57.682-04:00I wouldn't be surprised to see a rebirth of th...I wouldn't be surprised to see a rebirth of the PIH now that people have different lifetime expectations. With the dearth of well paid, but relatively unskilled jobs, most people will assume flat lifetime incomes. Even a lot of college graduates are facing this realization. There is also the expected kick in the guts as one approaches fifty, and not just for manual workers but for educated white collar workers as well. We are already starting to see pushback against the idea that anyone can benefit from getting a college degree.<br /><br />Also, it isn't fair to compare Newton, Kepler or Fleming to Friedman. Most of Newton's stuff is still taught in modern physics classrooms, though with much improved notation. Kepler's laws are still in use, even when doing general relativity. While penicillin is no longer the go to drug, except for syphilis, Fleming's work has held up pretty well. If you've been following that booger antibiotic story, you'd recognize Fleming's methods still in use, though with some modern techniques added.<br /><br />Economics still hasn't found its Newton. To be honest, I don't think it has found its Galileo. There is still way too big an ideological component in its theories which leaves it inconsistent with accounting, a well proven field.Kaleberghttps://www.blogger.com/profile/05283840743310507878noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-32735219299476693562016-07-31T20:18:15.780-04:002016-07-31T20:18:15.780-04:00Noah writes: "high inflation countries (which...Noah writes: "high inflation countries (which are probably the main cases Friedman and everyone else cared about)"<br /><br />High inflation, yes. <i>Substantial</i> inflation. The famous quote "inflation is always and everywhere a monetary phenomenon" has been shortened by the <a href="http://newarthurianeconomics.blogspot.com/2009/11/substantial-friedman.html" rel="nofollow">omission</a> of the word "substantial": Friedman explicitly identified "<a href="https://books.google.com/books?id=F5z1B5SwGUEC&pg=PT272&lpg=PT272&dq=%22substantial+inflation+is+always+and+everywhere+a+monetary+phenomenon.%22&source=bl&ots=SLbOzpwufI&sig=od501hJjQUS4SGpBCoaicnYdcvs&hl=en&sa=X&ved=0ahUKEwjs9crPoeLMAhVE2SYKHaD_Ae4Q6AEILDAD#v=onepage&q=%22substantial%20inflation%20is%20always%20and%20everywhere%20a%20monetary%20phenomenon.%22&f=false" rel="nofollow">substantial inflation</a>" as the monetary phenomenon he was describing, and then generalized his statement by omitting the one word.<br /><br />//<br /><br />More significantly, the problem with Friedman's work on the cause of inflation is simple arithmetic. He creates a ratio -- the quantity of money relative to output -- and compares this ratio to inflation, finding strong similarity between his ratio and inflation.<br /><br />But of course the similarity is strong! His "output" number has inflation removed, while his "quantity of money" number does not. His ratio skews upward like inflation because in a roundabout way <a href="http://newarthurianeconomics.blogspot.com/2012/09/symmetry-in-deception-similarities.html" rel="nofollow">he factors inflation <b>into</b> it</a>.<br />The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.com