Wednesday, August 3, 2016

A Monetary History of the United States

© 1963 by Milton Friedman

Frequently, with all the tax stuff I’ve been reading and studying, there’ll be a reference to an economic concept I know but can’t recite a specific definition for: GDP, inflation, the money supply, nominal this versus real that, etc. Googling such terms has rekindled an interest in economics I probably haven’t had since the early 2000s.

Way, way back in the pioneer days of college I took both macro and microeconomics 101. Thoroughly hated micro, with all the opportunity costs and units of utility and widgets and whatnot. But macro appealed to me, the ability to stare balefully down with a falcon’s-eye view upon the worms and mice of the national and global economy. So while I enjoyed it when I was suffering through it, it really had no day-to-day relevance to eighteen-year-old me. I promptly forgot it all before my nineteenth birthday.

In fact, my most delightful memory of college economics was walking to the lecture hall with my roommate one crisp fall day. He was wearing gray corduroy pants (it was a long time ago) and suddenly, completely unexpected, a squirrel raced out off the grass and clawed halfway up his leg. I never laughed so hard despite his panic attack which may not have been completely feigned. (We later deduced the rodent must have thought the corduroy to be the bark of a tree.)

Years went by … about ten or twelve. I took a bunch of business classes in night school. Finance was one of them. I enjoyed it, aced the class. Learned about stocks and bonds, interest rates, different types of money, etc. And again, forgot it all soon after. Then in the early 2000s, on a Hopperish whim, I read a few books on various economic topics. Some stuff stuck, some didn’t. One thing that remains with me to this day is the colossal mistake that was the Smoot-Hawley Tariff of 1930.

Anyhoo, I put away a couple of books on macroeconomics this summer, taking notes, hoping it will help me with the tax class I’m taking in the fall. Probably understood 76-79% of what I read. So, feeling somewhat emboldened, I decided to reach out for a masterwork. After a few weeks of hauling my weary carcass up hills, I set my sights on Everest.

That Everest was A Monetary History of the United States by Milton Friedman.

Now, I have tremendous respect for Friedman and this work. He was a Nobel-prize winning economist who eviscerated your grandparent’s Great Depression Keynesianism, influenced a whole generation of later economists, and was an unofficial adviser to Reagan and Thatcher in the 80s. He died about ten years ago at age 94. In the early 60s he wrote a couple of books which cemented his legacy. Monetary History, clocking in at 860 pages, was one of them.

So naturally I had to throw myself into it.

I got up to page 54 before I realized I was wasting my time. Not because of the book, no, not at all. Because I was ill-prepared for it. Basically a study of the changing size and make-up of the US money supply from 1867 to 1960 and how that affected the economy, Friedman analyzes different ratios, comparing specie to fiscal money (coinage versus paper – “greenbacks”), “high-energy money”, charting it all out, comparing his comparisons against each other. Consciously I made the effort to slow my pace down and read – and understand – each sentence before moving on to the next. After a short while, despite my best intentions, it all devolved into Hegelian gobblygook to my inner ears. About the only thing I could understand and appreciate was the politics behind all the comparisons. Which were often, Friedman admits, counterintuitive.

Ergo, with great regret, I return the book back to the library whence it came.

Please don’t mistake this as a critique of the book. I will return to it and master it. Just not right now, as it is way above my pay grade. Perhaps I’ll return to it next summer, depending on how things turn out over the course of the year. It does interest and appeal to the nascent yet stilted mathematician in me. A topic I’d never be able to discuss with anyone, yet one that would give me some degree of satisfaction.

A Monetary History of the United States – I shall return to you!

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