Where Have You Gone, Milton Friedman?

If Simon & Garfunkel were still recording today, they might pen a hit new song, to the beat of Mrs. Robinson, titled Where Have You Gone, Milton Friedman?

The Nobel Prize-winning, free-market economist died in 2006. But Friedman was not only a brilliant theoretician, he was an articulate advocate for our free-enterprise system. President Reagan awarded him the Presidential Medal of Freedom in 1988.

I remember as a high school student watching his TV program on PBS, Free to Choose. Friedmans ideas became the underpinnings of the Reagan revolution, not to mention Margaret Thatchers privatization movement that helped leapfrog Britains economy.

Today capitalism is under attack as never before and Milton Friedman is not here to defend it.

President Barack Obama and congressional Democrats are blaming capitalist greed for the current economic crisis, seeking to make scapegoats out of the rich, banks, Wall Street  the entire capitalist system.

Their solution is more government, more spending, and higher taxes.

What would Milton Friedman say to that?

Well, I can share with you a video of a testy but amusing confrontation between Friedman and liberal TV talk-show host Phil Donahue that took place in 1979.

Acting like Barack Obama, Donahue asks the renowned economist, When you see the greed and the concentration of power, did you ever have a moment of doubt about capitalism and whether greed is a good idea to run on?"

Friedman shot back: "Is there some society we know that doesnt run on greed? What is greed? Of course none of us are greedy; it's only the other fellow who's greedy. [The audience chuckled.]"

Friedman continued: The world runs on individuals pursuing their separate interests. The great achievements of civilization have not come from government bureaus . . .

In the only cases in which the masses have escaped from the kind of grinding poverty you're talking about, they have had capitalism and largely free trade . . .

There is no alternative way so far discovered of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by a free enterprise system."

Friedmans point is not that capitalism is perfect, but that it is better than all the other systems. Consider that the United States has just 5 percent of the worlds population, but its free-enterprise system produces 25 percent of the worlds GDP.

If Obama gets what he wants, attacking the rich and spreading wealth around, the U.S. will resemble the socialist economies of Europe  and it will also mirror their low rates of growth and economic activity. Obamas plan will not just hurt the U.S. economy, it will take the steam out of the world economys engine.

But Milton Friedman still has more to say about Obama.

Recently, Newsmaxs sister publication, Financial Intelligence Report, included an economic analysis from market expert David Skarica.

Skarica cited Friedmans 1992 classic work Money Mischief. As Skarica notes, everything that is unfolding today, including our governments response to the current crisis, is all laid out in Friedmans prophetic book.

Friedman argues that, during recessions, governments turn on the printing presses, Skarica wrote. Interest rates plummet as governments move to inflate the money supply in response to an ensuing economic meltdown, and the initial effects seem good.

That is, governments use spending to cover up economic ills, but that leads to rampant inflation.

Amazingly, what Friedman described is exactly what is happening today. Obama and the Democrats are unwilling to cut spending and be fiscally responsible, and instead will massively increase the money supply  which inevitably leads to inflation.

Skarica writes, We are seeing this phenomenon unfold right now before our very eyes.

Federal Reserve Chairman Ben Bernanke has said there is no problem with inflation, declaring on March 10, "We do think inflation will be low over the next couple of years."

And just this week, it was announced the Fed pumped another $1.2 trillion into the economy!

Bernanke surely knows what Friedman explained in Money Mischief  that it takes at least a year after the massive expansion of the money supply for inflation to rear its ugly head. And Bernanke is well aware, as Friedman so artfully explains, that inflation causes a brutal economic hangover, making things actually worse in the long run.

Sadly, our biggest problem today is not the economic one, but one of leadership and character. We do not have the Milton Friedmans to rise to the challenge.

Without Simon & Garfunkels new song, perhaps we can just change the lyrics in Mrs. Robinson to Where have you gone, Milton Friedman? A nation turns its lonely eyes to you.

Christopher Ruddy is Editor-in-Chief of Newsmax and publishes Financial Intelligence Report.