This article seems to miss both the actual point Friedman made and what modern economists and central bankers actually believe.
Modern economists talking about "interest rates" are talking about the base interest rate which is the cost of bank borrowing which creates new money. Friedman was also interested in regulating the supply of new money but wanted to try to fix the quantity of a monetary aggregate, which could be achieved by.... tweaking base interest rates. The modern central banking approach is to fix the base interest rate (essentially the price of creating money) for a fixed period and be more cautious about adjusting it rather than try to directly fix the quantity of money. Central bankers tried Friedman's approach of fixing the quantity of [a particular aggregate of] money in the early 1980s, it was extremely unstable with wild interest rate lurches needed to fix the quantity of the monetary base (and the monetary aggregates the bank wasn't targeting still wildly fluctuated in volume) and even Friedman conceded that with hindsight he might have made different recommendations. So they switched to fixing the price of credit rather than the quantity instead
The modern policy is consistent with what both Friedman and central bankers wanted to achieve (a relatively low and predictable rate of inflation). They raise base rates because the economy is growing and the level of borrowing with it. But they're not interested in raising interest rates so rapidly that firms end up with the same low level of borrowing as before, merely in stopping credit expansions from growing too fast and creating price inflation (and conversely, making it cheaper and easier to borrow when lending drops) so the interest rate rises tend to track rather than halt the natural rise in lending.
Most money is created by commercial bank lending. When a loan is made, the bank simultaneously credits the borrower's account and a adds a corresponding "negative" balance on the loan.
Money and debt are created and destroyed together, much like matter and antimatter.
Yeah, it's not that simple. It's never that simple.
When you deregulate the banks enough so that the 80's mechanism the GP talked about isn't working anymore, dealing with oscillations on the deposit rate becomes a major bottleneck for banks to issue new money.
I don't know enough to claim it's the largest bottleneck, but governments everywhere act like if it is. ("Governments everywhere" have mixed results on getting economics right, so take what you want from that.) But whatever the relative size, it's a relevant one.
According to your source, it's above where it was pre-pandemic. And mid-pandemic, when interest rates were arguably the lowest, is when it peaked at 85%.
The boring reality is that "savers" can keep their money in demand deposits and never spend them and they do this because the spread between the lowest deposit rate (0% because of cash) and interest paid on long term deposits is below their liquidity preference.
This forces companies and consumers to borrow new money back into the economy to keep the money that is actually circulating at the same level. Since nobody actually wants to take on more loans, interest rates keep dropping.
> Modern economists talking about "interest rates" are talking about the base interest rate which is the cost of bank borrowing which creates new money.
I find it interesting how fundamentally this "base interest rate" has changed after transitioning away from a gold standard. During the gold standard, this interest rate was simply the short term interest rate (also called the "discount rate") and did not involve the creation of new money (gold). So, during the gold standard, it was paid out of the existing supply of money (gold), whereas now it's created out of thin air.
>> did not involve the creation of new money (gold)
New money was created all the time - it was supposed to be backed by an amount of gold reserve. That was the whole point. It is not disputed that this is not what happened at all times.
That works until your economy stops growing, then the interest rate will not fall below liquidity preference, even though the return on capital is going down, e.g. everyone floods out of stocks into a useless shiny piece of metal. In a market with perfect competition, profits are 0%, making it impossible to pay any amount of interest.
I hope people notice the absurdity of valuing a company that produces more food less than a shiny metal that lets you speculate that you can buy food with it, even beyond the point where the food manufacturer had to shut down because you didn't pay him.
It is possible. But the evidence that is happening is relatively weak. The wealthy would struggle to consume anything more than they already do. A lot of commodity indexes suggest growth in the US has actually been stalled for a while (eg, energy, copper use are two metrics that don't look rosy to me).
Believing that economies like the US are growing often requires accepting beliefs like the economy being disassociated from the physical world. On the one hand, that is a defensible position. On the other it is stretching - some people care more about the physical world.
What evidence over what timescales are we talking about? Demand for certain types of energy stalling can actually be evidence that economic growth is leading to energy efficiency improvements, and use of a primary metal mostly used in manufacturing stuff US companies import to sell obviously isn't as good a proxy for real physical world growth as more people in work earning more money to buy more goods.
Sure, things look drastically different if you're no longer working in your pandemic affected role, if you have a minimum wage skillset or if you've spent the last half century in Detroit, but that's entirely compatible with growth being unequal
To clarify, your point is that for economy to be growing one of the following must be true (or some mix of them)
1. There is increased consumption (as in, increased unlocking and using of energy and resources to fulfill human desires we already know)
2. There are new human desires being made and valued higher than just fullfilling the existing ones more, mainly in the non-physical domain of culture, social value etc. and (nowadays) mainly digitally
And you are skeptical about the second one because some people care about the physical world?
It seems unlikely that all this talk about "inequality" would stick if people were happy with virtual wealth.
Eg, am I supposed to care about inequality caused because some people don't have a Facebook account/access to the Facebook ad market/a stake in managing the company? The accounts are basically free anyway. I'm convinced that Facebook has generated a lot of value, but I'm sceptical that anyone cares about the inequality of its distribution.
Compare that to food, energy, etc, where it is easy to see how lack of access/no ability to influence the decisions made would cause screams to echo throughout the land. I think that is probably what people care about when they talk of "the economy".
It's possible that the economy in aggregate is still growing, but is increasingly dominated by a smaller number of sectors. Construction, software, and healthcare are probably booming, to an extent that the entire economy still grows even if travel, hospitality, retail, and a whole lot else is contracting.
The US is becoming more and more a technology based economy which is less reliant on physical factors.
What does wealthy people consumption have to do with inequality? The wealthy create wealth by investment, and there is a massive amount of investment going on in the past few years, yielding unheard of returns.
"The US is becoming more and more a technology based economy which is less reliant on physical factors.
"
I don't think that's really true. There is a lot of physical stuff going on but it's being pushed out of sight and done by cheap labor. A lot of the shiniest companies wouldn't look that great if they didn't have this supply of cheap invisible labor.
Uhh it is absolutely true. The top 100 companies in the US by market cap are predominantly tech and healthcare based. We are increasingly outsourcing production of physical good to outside markets. 'There is a lot of physical stuff going on' isn't a useful assessment. Of course there is a lot of physical stuff going on, we are the largest economy in the world, there HAS to be.
The shiniest companies look great because they are able to automate and scale with incredible margins.
But something is happening, the SP500 is increasing (which in USD would be a meaningless statement), but it is also increasing in all (didnt checkk all) other currencies in the world, isnt it?
Because USD is a bubble, other countries wants to keep the USD high since they have lots of USD reserves, meaning that when USA prints money it doesn't weaken the USD. Until the other countries decides to bite the bullet and people stop using the USD as a global reserve currency.
USD a bubble is a huge stretch - you discount all your other comments with a comment as far reaching as this. If you are trying to insinuate that the USD has a higher value than its intrinsic value due to required demand as a result of a being a reserve currency than maybe you have something. That is nothing to do with being a bubble.
The USD is a reserve currency which has many profound effects associated with that it is not a "bubble" asset class at this point.
When the USD expands its currency base it actually does reduce the the USD valuation relative to other countries.
> The USD is a reserve currency which has many profound effects associated with that it is not a "bubble" asset class at this point.
That is the definition of a bubble. If people buy Tesla because they think others want to buy Tesla stocks rather than thinking the company will do well, then Tesla stocks are in a bubble. The same thing applies to USD. It being a reserve currency means it can keep its value without having assets backing up that value, that is how we define a bubble. Of course bubbles can last a long while, which is probably what you mean, but it is still a bubble and it will pop at some point.
Another reserve currency right now are bitcoins. Bitcoins being used as a reserve currency means people buy it to keep the value high, so that their savings doesn't go to waste. I'd still argue that bitcoins are a bubble, like the USD.
Absolutely and literally not a bubble - your definition is in fact, not a bubble:
"It being a reserve currency means it can keep its value without having assets backing up that value, that is how we define a bubble".
FYI: Money has three functions: a store of value, medium of exchange and a unit of account. Fiat currency does not have assets backing it up for that you would need the gold standard that we abandoned in in the 70s.
A bubble:
"Bubble, in an economic context, generally refers to a situation where the price for something—an individual stock, a financial asset, or even an entire sector, market, or asset class—exceeds its fundamental value by a large margin."
And to your bitcoin comment: not even the slightest - bitcoin is not money it does not have the same functions it is a speculative asset investment (taxed on your gains, which money doesn't have).
These conversations are always pointless though. The economy is so high dimensional that any conversation about it is going to be missing most of what is actually happening.
It's also possible to have growing economy, increasing inequality, more people entering the middle, upper-middle, and upper class than ever, the poor gaining wealth at the fastest pace on record, and an extremely high quality of life for those in the bottom quintile, which is what's happening.
There's nothing fundamentally wrong with wealth inequality (see Denmark), or fundamentally right about wealth equality. How many "rich" countries with extremely low wealth inequality exist? Meanwhile the least wealth unequal countries are also the poorest. It's almost like wealth inequality is highly correlated with overall richness and quality of life of a population.
The rich get richer while the poor get poorer is a myth. Economies are not zero sum. Just because the wealth of the wealthiest is increasing faster than the wealth of the poorest doesn't mean the poorest aren't gaining wealth faster and faster with time too (which they are in basically every first world/rich republic/democracy).
Global inequality is decreasing: other countries are getting relatively richer while the West is (at least relatively, on a global level) becoming less rich.
What do you mean "we"? Also it's quite possible that what you have is getting more and more expensive. (Eg. land! Because more people want the desirable plots/lots.) Energy. You use roughly the same amount, but it's getting more expensive, so you end up with less money to spend on leisure. Similarly with education and healthcare. People use the same amount (by default), but it's getting more expensive.
This is sometimes called the cost disease. Of course for services the cause is mostly the Baumol effect, but for land, housing, and energy it's mostly because supply is constrained.
Ever heard of Thomas Piketty? r>g? Land and money both have an unnaturally high liquidity preference i.e. they have value because of network effects. This allows returns of the rich to exceed the growth rate and thereby cause the rest of society to end up poorer.
Ultimately, the returns on capital are paid by the working class and paid to the rentier class, that owns exclusive access to publicly created value (the rich obviously have more money and land than the poor).
It's like saying "Insulin reduces blood sugar, but our data shows that blood sugar is highest when insulin is administered."
The fed's control over interest rates is complete, but not the market's response to rates. And when do you increase interest rates? When the market is offering credit at a pace faster than you want. So it seems intuitive that lending is highest during high interest rates (or at least significantly overlap)?
I agree. Central bank policy should be analyzed the same way as other feedback contollers.
It's popularly believed that furnaces provide heat, but in fact, furnace activity closely correlates with low temperatures, and indeed furnaces are actually off entirely during the hottest times of the year.
It is popularly believed that cars take you closer to your destination, but in fact, car usage correlates with being far from your destination, and people who live close to all their desired destinations may not own a car at all!
My teacher explained it as such: imagine you look at a correlation between the position of the gas pedal and the car speed while driving normally (so - at the speed limit) on a hilly road. You'd conclude gas pedal and car speed are completely independent.
I'm not an economist, but a simpler explanation is that the credit volume change lags the interest rate changes, because it takes a while for inertia in the system to play out, because a lot of credit might be at fixed rates and terms. Therefore the decrease in volume follows a period of sustained higher rates, and vice versa, as investors and borrowers adjust to the changed rates.
I've never seen a large real world system that has instantaneous response in any field. It always trails the stimulus by some time.
That said, I'd like to hear from someone who has thought about it more why they simpler explanation doesn't work.
You have it exactly right, but you left out two important factors. First, not everyone has equal access to financial markets. A retail consumer can't go to the Fed and take out a loan at the discount rate to finance the purchase of a house. They have to access that credit through a middleman -- a bank, and banks are a good-old-boy network. That complicates the system response tremendously because it brings lots of human interpersonal dynamics into the mix. The idea that the economy is a distributed system of rational actors is just wrong. And second, everything Milton Friedman says has to be viewed through the lens of his political agenda, which was radical libertarian. So whenever Friedman says anything you always have to ask yourself: is he saying this because it is actually correct and there is actually data to prove it, or is he saying it because this conclusion is necessary in order to bolster the case for abolishing government? Just like the economy, the dynamics of economists is much more complicated than intellectually honest scholars seeking truth.
I agree that Friedman was ideologically opposed to government intervention, to some extent. That said, if you read him or watch his show he demonstrates an intellectual honesty and willingness to debate with anyone. The great tragedy with Friedman was that politicians, especially right wing, used his rhetoric selectively — which was very effective but dishonest. The world absolutely did NOT move in the direction of fiscal conservatism and small market-regulating governments, but quite the opposite. Yet people still act as if he was the puppet master of the corporatist kleptocracy we find ourselves in. It's a shame he died before the 2008 crisis, he probably turned in his grave when the bailouts happened.
Not doing the bailouts would have been a catastrophe that made Greece 2008 look relatively mild, across the entire Western world. Ordinary retail banking, cheque clearing etc would have been locked out for months while the bankruptcy was untangled.
Should the UK have said "sorry, if your bank account was with RBS, you don't have a bank account any more and you'll have to see what is left after the recievers have sold off the office furniture to see if you get any money back at all"? Including all businesses which bank with RBS? Many of whom themselves would be bankrupt as a result?
That said, there was a lot of choice in how the bailout was done, and in many cases it was done badly. Things like the robosigning fraud in the US should have been prosecuted more aggressively.
> he probably turned in his grave when the bailouts happened.
Maybe, but that is actually kind of the point. The bailouts were inevitable. It is simply not possible to structure an economy in such a way that the consequences of bad decisions fall solely on those who made the bad decisions. There are always externalities, moral hazards, and politics. If Friedman was intellectually honest then he was also hopelessly naive.
Yes, I understand that. But that is clearly an ideological position unsupported by any data. And in fact, if you think about it, this is necessarily the case because this position is necessarily based on assumptions about what constitutes a good outcome, and that is necessarily a matter of opinion, not objective fact.
And BTW, with regards to that video link, it's pretty easy to cherry-pick an encounter between Friedman and a woefully underprepared student that makes the student look like an idiot. But in fact the student is correct. Government is much better at providing infrastructure than the private sector, with the internet being exhibit A.
In that video link, the student isnt even challenging Friedman, just trying to ask a nuanced question. I actually agree with what he carefully says at the end (as its mostly vague and handwavy "dont do too much government intervention of the wrong kind") and Friedman still comes off as a complete asshole.
And yet people seem to view this as a success for him. Strange.
> or is he saying it because this conclusion is necessary in order to bolster the case for abolishing government?
Milton Friedman was libertarian, but not anarchist, IIUC. You may have conflated him with his son, David D. Friedman, who wrote The Machinery of Freedom.
Anarchists (left-libertarians) advocate people organize and build their own roads. Versus waiting for some far away unaccountable centralized state bureaucracy to do it.
That's fair enough, although what about long distance roads?
And what if people use the roads without paying? It's not a great commercial enterprise to build most roads, there's no way to have competition, so you'd probably need a large organisation. But then you'd have every user pay the same? Or make the more wealthy pay more? What if this monopoly turned a bit evil, we'd want some way to control who was running it, maybe if we were all members, and voted on who should run it perhaps?
Anything I can say is purely hypothetical. Because we have no left-libertarian societies to study.
But I'd like to believe that people would make stuff for use by people. People need to move? Cool. What's a good strategy? Isn't necessarily cars and roads. We'd probably have better land use policy and mass transit to optimize for moving people around.
Also, the engrained corporatist rhetoric is that every belief to the left of Grover Norquist is against capitalism, markets, competition, profits, and Freedom Markets™ in general. Nope. Not true. We love that stuff.
Corporatists (monopolists) hate competition, free enterprise, and so forth. All the anti-left screeching is pure projection, kabuki for the news cameras.
Well it looks like I triggered a debate about Friedman's MO, which is fun, but not necessarily what I was after.
So asking again: why is the mismatch between interest rates and credit volume not just explained by the delayed system response to the interest rate change, versus the extremely complicated supply-side explanation in the blog post?
> If credit was really as cheap and widely available/accessible as it is often claimed to be, then why have annual small business loan originations still not recovered and reached levels seen in the early 2000s?
The fact that the cohort of people that would be taking on these business loans today are already strapped with 6 figures of college debt might have something to do with it
Would have loved to know that before being pressured by the entire school system around me to pick the high school with the best feeder stats and the highest graduation rate. Before spending literally the last two years of high school mostly just working on getting into college.
Does it not once occur to people who play the incredibly tired libertarian lines that in fact we do live in a society that exerts constant coercion on how we lead our lives? As unhelpful as this rhetorical frame is, taxes aren't the only thing that is being stolen... so is agency.
That's non sequitur. If you open a community pool shortly after a self-flagellation ceremony in your neighborhood and someone proposes all the open wounds is why you're not getting the traffic you expected, the plausibility of the explanation is completely independent of whether or not it was voluntary to participate in the ceremony.
Modern society is pretty much designed to give people with college degrees an advantage. Yes, you can have a good career in the trades but a college degree is the safest bet. Life is much harder without.
It would be well worth reading regular reports that come out of central banks, which do address what the article mentions. Some can be a bit estoric and there only if you really know what you're looking for stuff.
I'll take the UK for example, as I'm most familiar with that:
The Bank of England publish their Inflation Report [1] every quarter. There's quite a lot of interesting information in there. Credit conditions are mentioned in the linked article, which there's a specific report for, called Credit Conditions Survey [2]
Lots of people know what money is. Sort of. The article also mentions volumes of lending. This comes in monetary statistics too, but you have to dig for it. [3], from the URL the phrase 'need to know what you're looking for' - this is what the author may be looking for in terms of interest rates and volumes of lending.
Money, as an economic concept, has been out of fashion for several decades, ever since velocity of M0 started doing funky things that should have been well understood and anticipated and never used as a monetary target under those conditions. It remain no less relevant however. To make sense of it does takes some analysis.
Other central banks do have, and most provide, similar data. The format's a bit different. ECB and Eurostat for the Euro area, various FEDs for the US, etc.
I suppose
> Modern economists and financial analysts
may find the above useful if they with to become less 'average' as the article mentions. I assumed the average economist would be aware of these. Disclaimer: I am not an economist, just someone that takes an interest.
In the Princess of the Yen book it was shown that in the post-war Japan BoJ was primarily controlling amount of credit creation (in addition to selecting sectors which got it) and that interest rate was a just secondary tool. If a central bank does not have such degree of control over its domestic banks, then it has to use the rate policy, but it's a quite blunt instrument with significantly lagging response (since you can not easily cure systematic risk-aversion, even if loans are dirt cheap). But there is another tool which can be used by colluding with domestic government: debt monetization (a.k.a. "money printing"). It results in the financial system being flushed with newly created base money, thus reducing the need for additional credit. As noted in other comments: many have option to leverage, but prefer not to. Not only because future looks too uncertain, but also because today they have enough cash to get by.
In summary, Friedman’s fallacy is derived from two fundamental, yet counterintuitive, observations of economic history. One, when the economy is rapidly and robustly growing, and there are plenty of profitable investment opportunities, interest rates tend to increase, as both financial and non-financial institutions bid for funding/financing to take advantage of the differential between the current interest rates and the future returns on invested capital. Two, rather than differentiate between good or bad credit based only on price (via higher or lower interest rates), banks and institutional investors also differentiate between good or bad credit based on access, so that uncreditworthy businesses are altogether excluded from global debt markets, counterintuitively causing falling, rather than rising, interest rates as credit is contracting.
First of all, and most obvious, fed rate is controlled variable which regulator can change in response to what is happening to economic metrics.
The article somehow glosses over the fact.
I think, FRS changes base rate at least partially in response to amount of credit issued and total amount of money in circulation.
It takes in account many other variables, of course, but still. I think it is possible that fed will raise base rate immediately following rapid expansion of credit to prevent overheating and inflation. On the other side, when lending is insufficient, FRS might consider lowering rates. There is no surprise in that. It will lead to somewhat correlated graphs of credit issued and rates.
I would like to see if graphs and their derivatives could be predicted from one another.
I've yet to find anyone who can explain to me how interest rate woo is supposed to fix the cost of essential imports like energy - which historically is one of the most obvious and direct causes of inflation.
The inflation of the 70s wasn't caused by the cost/availability of credit, it was caused by the fact that oil prices jumped from an average of $4 in 1973 to $13 in 1974.
For some reason we're supposed to pretend this had no significant effect on prices in an economy largely powered by oil.
It's baffling that educated adults can still take this seriously.
> The inflation of the 70s wasn't caused by the cost/availability of credit, it was caused by the fact that oil prices jumped from an average of $4 in 1973 to $13 in 1974.
> For some reason we're supposed to pretend this had no significant effect on prices in an economy largely powered by oil.
Because there are different types, or sources, of inflation:
And not all of them are caused interest rates and the availability of credit.
> It's baffling that educated adults can still take this seriously.
Perhaps the adults who take this seriously have better educated themselves on the topic. If the experts in a field hold a different view than you, it is often prudent to examine whether you're missing something.
Because foreigners don't want pieces of green cotton for their goods, they want things.
If interest rates are low, money is cheap for Americans and they can buy real things with something that is worth less (not worthless) that it was. Its worth less because Americans didnt have to produce to make that dollar.
On top of that, since the dollar is the reserve currency, all the price inflation is effectively diluted among all countries.
So America gets to print its budget deficit and not even suffer as great an inflation. But the price inflation pressure is there, it must be there.
Its what the French called “America’s exorbitant privilege”
As to the oil shock, of course that affected prices. But the embargo only lasted 6 months, didn't cover Europe and oil is fungible (ie Americans can buy Norwegian oil destined to Ireland at a small premium and the Irish buy oil from the Arabs [1])
[1] this is an illustrative example. I don't know or care where the Irish buy oil
This is why central banks tend to look at measures other than CPI when they make their decisions. For example, "core" inflation does not include energy, which is highly volatile and doesn't directly represent the loss of value of the currency.
> This is because almost everyone is thinking about and taking into account only the demand side – most people would love to borrow at low interest rates, ...low interest rates must mean that credit is both cheap and plentiful. However, not thinking about and taking into account the supply side of the picture
I'm not sure this is any kind of explanation to the contrary. Credit issuance means someone took advantage of credit offered, not a total of the available credit (offered).
I got a home mortgage 2.75%@30yrFxd with 7%! down for hundreds of thousands of dollars this year. I have a friend who has almost 100k in debt, which she cannot service, and a credit score of just over 640 (by gaming the score during the pandemic from 500s) and has credit cards with 10k limits coming in the mail.
Credit IS cheap and plentiful and the same mistakes of 2007 have been amplified by the banking system (Fed + too big to fail cronies).
That's the fallacy, right? One would think it is plentiful given the low rates, you have an anecdote that it is, but look at the data. Lending is fraction of what it was in 2007.
Again, that's because people aren't taking out copious credit, not that they aren't being offered. There's no data on what's offered, only what's contracted.
Ofc if you have decent credit you will get offers even in economic crashes which isnt relevant. That's part of the debt economy.
There's no accurate aggregate measure of lines offered (only those issued), which is the subtle problem with the (most) analysis about credit gluts vs interest rates.
Compared to 2009, credit is loose and readily available. The phrase indicates a level of lending optimsm or negligence, depending on the specifics (person terms bank timeperiod).
It makes sense to me because banks make more money on loans when the interest rate is higher, so they would be more willing to give loans out. Under 0% Fed fund rate conditions, if inflation hits any kind of stride, it can be disastrous for lenders who now hold diminishing assets.
The author should consider A Monetary History of the United States by Friedman.
The EFFR is exactly incrementally increased in a way to not immediately perturb markets, to slowly approach its target. It is also well known that there is delay expected between prices of all assets (including credit) to react to monetary conditions.
>In conclusion, one can theorize that falling interest rates can be indicative of tight monetary conditions in the economy in the sense that demand for credit is falling (due to explanation one) and/or access to debt funding/financing is limited to just the largest and most creditworthy businesses (due to explanation two).2
Boomers are retiring or getting damn close. They are moving their investments to 'safe' options like bonds. In reverse the system has to match up those bonds with someone issuing a bond. This is typically cars and houses. So for a boomer to invest in a bond, someone had to have bought a house. If interest rates were high, then people wouldnt be buying houses. So interest rates must drop so that the investments can happen.
Furthermore, it's also those same boomers who are selling their large house to 'downsize' or whatever. They cant sell unless someone is buying.
The even crazier thing, the real yields on bonds are negative right now. Interest rate is 0.25% in Canada while inflation is at 4.7%.
So retirement funds are effectively losing the difference. The boomers thought they could retire because they have some nice big numbers but it's double edged. They might have a big number but it doesnt grow much at 0.25% and their costs to buy things is 4.7% higher. So in a few years many boomers who retired may find out they cant afford to be retired anymore.
While there are plenty of close-minded conservatives, in contrast Milton Friedman was genuine, engaging, and patient with all interlocuters. There are hundreds of hours of video available showing how not only was he gracious and humble, he was an excellent listener as well.
But despite this track record of affable behavior, he's demonized. But he's demonized not because he was a polemic, but rather because he was effective. And that's the unfortunate reality of today's political discourse.
For those who don't know about Milton Friedman, I highly encourage you to watch one of the many Youtube videos where he's being interviewed (such as when he was interviewed on the Phil Donahue show). You can judge for yourself.
That Phil Donahue show blew my mind when I happened to come across it at some point. Not exclusively for the deft conversation Milton had on full display but also of the high brow content that a midday talk show felt worthy to share with their audience. It was such a contrast to think of content like that to Jerry Springer decades later. What a change in genre.
I remember showing someone who absolutely loves fallout New Vegas a video about how terrible fallout 3 is in comparison, and he said he didn't want to watch it because the narrator was too left wing. That was strange
Central banks of nations who issue their own currency on a floating exchange rate have complete control of the cash rate. The natural rate of interest is zero so if the central bank didn’t interfere that’s where it would tend towards.
Modern economists talking about "interest rates" are talking about the base interest rate which is the cost of bank borrowing which creates new money. Friedman was also interested in regulating the supply of new money but wanted to try to fix the quantity of a monetary aggregate, which could be achieved by.... tweaking base interest rates. The modern central banking approach is to fix the base interest rate (essentially the price of creating money) for a fixed period and be more cautious about adjusting it rather than try to directly fix the quantity of money. Central bankers tried Friedman's approach of fixing the quantity of [a particular aggregate of] money in the early 1980s, it was extremely unstable with wild interest rate lurches needed to fix the quantity of the monetary base (and the monetary aggregates the bank wasn't targeting still wildly fluctuated in volume) and even Friedman conceded that with hindsight he might have made different recommendations. So they switched to fixing the price of credit rather than the quantity instead
The modern policy is consistent with what both Friedman and central bankers wanted to achieve (a relatively low and predictable rate of inflation). They raise base rates because the economy is growing and the level of borrowing with it. But they're not interested in raising interest rates so rapidly that firms end up with the same low level of borrowing as before, merely in stopping credit expansions from growing too fast and creating price inflation (and conversely, making it cheaper and easier to borrow when lending drops) so the interest rate rises tend to track rather than halt the natural rise in lending.