Peter Robinson is an excellent interviewer. He does not let himself and his own ego get in the way of asking good questions---an uncommon virtue for a talking head.
In this interview Milton Friedman responds to questions concerning the role of government in society. Robinson begins by asking for a clarification of libertarianism. Friedman asserts there are two stripes of libertarianism and decidedly sets himself down with the latter of the two described.
There is enough room for disagreement between the Rothbard types and the Friedman types without parting ways. There is certainly enough freedom to reclaim and protect to keep the two camps united!
"Economics, as we have now seen again and again, is a science of recognizing secondaryconsequences."~~~Henry Hazlitt, Economics In One Lesson
What would happen if the current income and estate tax rates stayed the same? That is, what first and second consequences would ensue from not raising taxes?
Americans would do one of three things with their un-confiscated property. Any of these would be a first consequence of not raising taxes:
Spend it
Save it
Invest it
And then there are the secondary consequences of not raising taxes:
If spent, un-confiscated property contributes to economic activity. That's good in a recession
If saved, un-confiscated property adds to capital accumulation which makes more capital available for lending, thus increasing credit availability. That's good in a recession.
If invested, un-confiscated property contributes to capital investment without which broad economic expansion cannot take place. That's good in a recession.
If government decreases the amount of property it allows Americans to keep, all three of these opportunities expire. That's a consequence of raising taxes and that's not good in a recession.
The recent disclosure of the Fed's activities surprised even Ron Paul.
So long as the Fed has fiat control of the money supply there will only be a negligibly free market. Inflation and bubbles (that always bust!) are creatures of the Fed, not the free market. How could inflation and bubbles possibly be the result of free market capitalism? The Fed has kept the money supply inflating toward special interests and not the broad interests of a free market, hence all the inflation and bubbles. (Note the 7:57 mark)
Somehow, like Congress itself, every time a financial crises comes along the Fed gets to play the innocent bystander, as if it is not itself responsible.
