Bruce Bartlett has an informative piece over at the Fiscal Times (see here) in which he is as perplexed as anybody about the "Fed bashing" that is all too common among the Republican candidates for president. He points us to a 1997 piece that Milton Friedman wrote for the Wall Street Journal regarding Japan's similar recession. Professor Friedman said:
“The surest road to a healthy economic recovery is to increase the rate of monetary growth, to shift from tight money to easier money…. Defenders of the Bank of Japan will say, ‘How? The Bank has already cut its discount rate to 0.5 percent. What more can it do to increase the quantity of money?’ The answer is straightforward: The Bank of Japan can buy government bonds on the open market, paying for them with either currency or deposits at the Bank of Japan, what economists call high-powered money.”
I confess that simply do not understand some of the statements about the Fed from the likes of Rick Perry and Ron Paul; moreover, it is disappointing that people take their statements seriously. Milton Friedman has always been something of an economic hero to Republicans. I can't believe he would happy with the current crop of leaders in the GOP.
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