Ben Friedman Macroeconomists study the supply and demand of goods, labor, and capital. They analyze how these markets affect the economy and how macroeconomic policies can help stabilize them. Macroeconomics is a highly complex field, and it takes years to learn its nuances, as Ben Friedman Toronto thoroughly. Friedman is a macroeconomist who is also a professor of economics at the University of Chicago. His work has been very influential, and other economists have cited his writings since the 1970s. Friedman’s work focuses on how economies adjust to changes in supply and demand and how monetary policy affects these adjustments. This article will discuss some of his famous works and what they mean for you as an economist.
1. “Inflation is Always and Everywhere a Monetary Phenomenon.”
“You can have inflation, or you can have unemployment. You cannot have both,” Friedman once said. He referred to the fact that inflation, or rapid increase in the general price level, is always caused by an increase in the money supply or an increase in the supply of currency. This means that a coin with a low supply is more likely to experience inflation than one with a high collection. In Friedman’s view, this means that every country’s central bank should target inflation as its primary objective and not unemployment. The US Federal Reserve has adopted this approach since 2008, pledging to keep inflation levels low and stable at around 2%.
2. “Deflationary spirals are impossible.”
One standard theory in economics states that when demand for goods and services decreases due to deflationary forces like recession, firms will cut production so they won’t be forced to reduce prices as much as competitors. In this scenario, demand for goods and services will decrease even further, which will lead to a decline in production and prices. This will lead to more deflation, which will cause the economy to shrink even further. Friedman disagreed with this theory and called it “a silly argument.” He said that deflation was possible but only if you had a “truly rigid government” that would be willing to sacrifice its own citizens’ welfare for the sake of the economy.
3. Money supply is not a “thing.”
Friedman believed that money does not exist in the real world but is instead an accounting device used by banks to keep track of their currency and gold reserves holdings. In his view, there was no such thing as money supply because no one could ever know how much actual physical money exists in the world or where it all is located. He also made clear that he didn’t think that government should intervene in the economy by managing interest rates or creating money.