Friedman
was a true proponent of individual choice and free markets. He emphasized
growth and freedom and opined that the government was supposed to intervene on
issues regarding third party impact on individual action but highlighted that
other than this, if the government became more involved,  it would cause more harm than good (Adams,
2006). Friedman asserts that the most appropriate way to comprehend spending
and saving was not according to Keynes argument of resorting to psychological
theorizing that is loose but instead proposes that we should think of people as
developing plans that are rational regarding the way they should spend their
wealth in their lifetime (Goodman, 2008). His life cycle model and permanent
income hypothesis provided an answer to multiple paradoxes regarding the
association between spending and income. Friedman opines that inflation and not
investors are the key contributors of depression and economic downturn.
Therefore he proposes a Federal Reserve that is rules based and in which money
quantity increase is pre set as opposed to one that is involved in activism
that is discretionary (Krugman, 2007). He associated unstable economy with government
failure and not the failure of the market. He opposed the price controls and
programs of the government and instead promoted the free market and the need
for the government role in these free markets to be minimized as a way of
creating social and political freedom (The Gale Group, 2008). Friedman also
asserts that inflation is purely impacted by the changes in the supply of
money. Friedman was also lobbying against all forms of regulation and
environmental protection which his enemies and families ignored.

Milton
Friedman emerged following the second World War 
in a period where the thoughts of economic field  was dominated by John Maynard Keynes theory  that called for activist spending by the
government  to trigger demand  as well as remedy the economy  at times of trouble  such as was the case with the 1930s Great
Depression (IP and Whitehouse, 2006). 
Friedman who was studying at Chicago then countered the approach by
Kyenes by proposing that the government is supposed to if possible to restrain
from the affairs of individuals and markets are able to solve the problems of
the economy in an efficient manner than the officials of the government (Adams,
2006). This idea of Friedman formed the foundation of what turned out to be the
Chicago school of economics known as free market capitalism concept. His theory
was founded on the weak points he identified in the Keynesian theory. After the
boom experienced in U.S and other countries following the Second World War a
Friedman’s arguments for less involvement by the government was undermined
since the ideas of Keynes were proven right (Goodman, 2008).  However when the levels of unemployment
reached fresh highs and prices of oil increased, people started paying attention
to the ideas of Friedman. His policies of laissez faire were incorporated by
the governments of both U.S and U.K (Krugman, 2007). Friedman was also affected
by the great depression which he asserted that was a product of a drop in money
supply. The Great Depression was a global economic depression that kicked off
in the year 1929 and stayed for ten years leading to a 25% rate of
unemployment.

Milton
Friedman’s advocated for free markets as opposed to the intervention of the
government and his assertion regarding fighting of inflation by the central
bank was perceived as a fringe notion by a significant number of economists
(Adams, 2006). Friedman created an intellectual foundation for anti-inflation,
antigovernment policies and tax cutting policies of British Prime Minister
Margaret Thatcher and President Ronald Reagan as well as a season of central
banking that is more disciplined (Goodman, 2008). The ideas of Milton Friedman
aided in putting an end to 1970s military draft,  gave rise to conservative causes that are
staple like the school vouchers and generated the groundwork  for fresh economic views regarding exchange
rates, unemployment and great depression. Columns, popular books and academic
papers of Milton Friedman aided in shifting debates in U.S and overseas on the
appropriate role of the government in the national economy’s management
(Krugman, 2007). His ideas spread to Eastern Europe, Hong Kong, Chile and
Russia where his ideas were used by reformers who were advocating for open
markets and privatization. In the 1960s he came up with the theory that low
unemployment rates could be maintained by allowing for high rates of
inflation.  This view is used by multiple
central banks today such as the Fed and it aided in overcoming the 1970s
inflation and formed the foundation for low unemployment and inflation in the
1990s and presently (The Gale Group, 2008). Paul Volcker the Fed Chairman in
the 1979 put to practice this monetarist theory by putting in place money
supply target that pushed interest rates to levels of double digit, pushing the
economy into deep depression and this move brought down inflation. Friedman’s
idea of negative income tax to get rid of poverty formed the basis of Earned
Income Tax Credit of the present day (IP and Whitehouse, 2006). Friedman also
attacked the fixed currency exchange system which emerged following the Second
World War after Mr. Keynes encouragement. The same is following a testament
from his friend George Shultz who worked in the Reagan and Nixon administration
(Krugman, 2007). He stated that before Nixon took office in 1968, Friedman
wrote o him asserting that the pressure associated with tying the dollar to
gold was not proper and it was appropriate to immediately sever any links by
taking an affirmative action as opposed to waiting to be forced to severe links
(The Gale Group, 2008). Nixon did not listen and Friedman’s assumption came to
be forcing him to abandon in the year 1971 the gold standard. During the Second
World War in the year 1942 where he worked for the government of the US,
Friedman aided in designing a payroll tax used in Britain known as Pay As You
Earn and known as withholding tax in the US (Goodman, 2008). His idea of
withholding tax has survived time and it is currently used all over the globe.
President Ronald Reagan used the laissez-faire ideals of Friedman in slashing
regulations, cutting taxes and selling public industries to private
individuals. These moves grew the economy and abated inflation.

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