David Beckworth and William Ruger had an op-ed in the Investor’s Business Daily last week on what Milton Friedman might say about monetary policy. I am not going to weigh in on what Friedman might or might not have said if he had lived to see the Great Recession. However, I do want to address one point. One of the criticisms of Beckworth and Ruger’s op-ed that many Friedman supporters have levied is that Friedman advocated stable money growth and therefore would not support quantitative easing. So let’s look at Friedman’s favorite monetary aggregate, M2:
Graph source here.
Does this look like stable money growth? It looks to me like the growth rate of M2 has slowed substantially.