Chapter 3, The Control of Money Summary and Analysis

Some say that free-market economies are inherently unstable and can produce boom and bust cycles. One role of government is to even out these cycles, as was most prominently argued in the New Deal. Currently economic growth is the excuse for government control. However, the Great Depression was produced by government mishandling the money supply.

Friedman wants to dispute both the view that the gold standard for backing money is good and that a group of technicians should have wide discretionary power to manipulate the money supply through a central bank. Liberals want to maintain a maximum feasible decentralized power, but this raises a problem with money. Most agree that government is responsible for money, but governments can mishandle it and use a central banking power to enrich themselves.

Most often money has...