When you asked me for my list of books, I debated about whether to put The General Theory by John Maynard Keynes on the list. The General Theory is an incredibly important book, but it’s basically a theoretical explanation of how aggregate demand could affect output. It was Friedman and Schwartz who provided the empirical evidence that supported the theory. That’s why A Monetary History went to the top of my list.
Christina Romer is of course totally right – Friedman was right about the Great Depression. Because Romer read Friedman she also fully well understand the monetary reasons for the Great Recession.
It is a testament to Friedman’s scholarship that his work holds up so well.
Now if only conservatives can admit that if Friedman was alive, he would support having the Federal Reserve be much more active in working to speed up the economic recovery.