The Teachings of Milton Friedman and Thanksgiving 2021
Timothy Nash | Nov 22, 2021Inflation is an increase in the overall general price level of an economy. It should not be confused with an increase in the price of a good or service over a short period due to increased demand, relative to supply in the case of the introduction of a new version of a product like an Xbox, nor reduced supply, relative to demand due to supply chain problems, such as the case of computer chips for automobiles.
Nobel Prize-winning economist Milton Friedman noted, “Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output (goods, services and or assets).”
What is noteworthy today is President Biden declared in 2020 as he campaigned for the U.S. presidency that “Milton Friedman is no longer in charge.” This is ironic given that 10 months into Mr. Biden’s presidency (and driven by massive increases in fiscal and monetary policy from his and the previous administration) he is presiding over the highest rate of U.S. inflation in more than thirty years. Or as Bill McGurn recently pointed out in The Wall Street Journal on the 15th anniversary of Dr. Friedman’s death: “Friedman seems to be getting the last laugh on the issue of inflation” making the University of Chicago icon as relevant as ever. This is especially true today as one reflects on Friedman’s secondary definition of inflation as a “cruel tax”. Here Friedman notes that inflation reduces a persons' purchasing power as more dollars are injected into the economy relative to output making each dollar less valuable and harming the poor disproportionately! . . .
https://townhall.com/columnists/timothynash/2021/11/22/the-teachings-of-milton-friedman-and-thanksgiving-2021-n2599444
