Today I will pass over Friedman’s contributions to our knowledge of monetary history and focus instead on how his ideas have influenced our understanding both of how monetary policy works and how it should be used. That is, I will discuss both the positive and the normative implications of Friedman’s thought.
The usual disclaimer applies, that is, I speak for myself and not necessarily for my colleagues at the Federal Reserve. In preparing this talk, I encountered the following problem. Friedman’s monetary framework has been so influential that, in its broad outlines at least, it has nearly become identical with modern monetary theory and practice.