Krugman on Friedman, Hayek, and Liquidationism

by  Larry White  published by Free Banking (August 12th, 2013)

In a blog post yesterday, entitled “Friedman and the Austrians”, Paul Krugman quotes Milton Friedman’s charge that in the “London School (really Austrian) view,” i.e. the view held by F. A. Hayek and Lionel Robbins, the depression was an inevitable result of the prior boom, that it was deepened by the attempts to prevent prices and wages from falling and firms from going bankrupt, that the monetary authorities had brought on the depression by inflationary policies before the crash and had prolonged it by “easy money” policies thereafter; that the only sound policy was to let the depression run its course, bring down money costs, and eliminate weak and unsound firms. Krugman than remarks: Continue reading …

 “Friedman and the Austrians“ by Paul Krugman