Milton Friedman

1912–2006 Nobel Prize in Economics, 1976

Inflation is always and everywhere a monetary phenomenon in the sense that it can be produced only by a more rapid increase in the quantity of money than in output.

Biography

Milton Friedman was the most influential economist of the second half of the 20th century. He won the 1976 Nobel Prize for his work on consumption, monetary theory, and the complexity of stabilization policy. A Monetary History of the United States, co-authored with Anna Schwartz, is the most rigorous empirical demonstration of how monetary contraction caused the Great Depression — directly contradicting Keynesian interpretations. Friedman taught at the University of Chicago for thirty years and shaped the school of monetary economics now known as monetarism. He is also a foundational figure in modern free-market libertarianism through Capitalism and Freedom and the popular television series Free to Choose.

Major Works

A Monetary History of the United States, 1867–1960 (1963)
Capitalism and Freedom (1962)
Free to Choose (1980)
The Optimum Quantity of Money (1969)

The Bitcoin Connection

In a famous 1999 interview, Friedman predicted that the internet would soon make possible a reliable e-cash: "I think that the Internet is going to be one of the major forces for reducing the role of government. The one thing that's missing, but that will soon be developed, is a reliable e-cash — a method whereby on the Internet you can transfer funds from A to B without A knowing B or B knowing A." That prediction was made nearly a decade before Satoshi's whitepaper. Friedman's monetarist framework — money supply matters, inflation is monetary, central planning of money creates business cycles — is also the theoretical bedrock for arguing that Bitcoin's rule-based supply schedule is structurally superior to discretionary central-bank policy.