Conservatives Need More Friedman, Less Hayek

It's getting less lonely out here! As James Pethokoukis of the National Review notes:

If Friedman had the same intellectual standing with Republicans today as Austrian economist Friedrich Hayek does, the GOP might at least be aware of the possibility that (1) it was a tightening of monetary policy in 2008 that exploded a modest downturn into the Great Recession, (2) today’s low interest rates signal tight money, not loose, and (3) bond buying is exactly the right policy when interest rates are near zero, inflation quiescent, and the economy moribund.

Friedman knew that while inflation is everywhere and always a monetary phenomenon, it isn’t everywhere and always a big problem. The year 2013 is not 1980. Instead of badgering Bernanke about inflation, Corker should have hammered him for his historically awful unemployment record, for letting nominal GDP collapse in 2008 and remain below trend since, and for a stop-and-go QE strategy that undercut the policy’s effectiveness in changing the expectations of consumers, businesses, and investors.