AS,
A MF quote:
Why should they also be accepted by private persons in private transactions in exchange for goods and services?
The short answer�and the right answer�is that private persons accept these pieces of paper because they are confident that others will. The pieces of green paper have value because everybody thinks they have value. Everybody thinks they have value because in everybody's experience they have had value...
Money Mischief (1992), Ch. 2 The Mystery of Money
So what happens when folks lose that belief? That thought is already with us and is a growing concern in the US.
MF charted the course and set the US on its current tack.
Milton Freidman took the easy way out and traded away long term stability for short term gains. May have been in the pocket of the bankers and politicians. He was pro debt and pro inflation but, in his favor, he did seem to know that limits existed. That seems forgotten now.
Debt does not go away. It is always paid. By someone in some way.
TF
"The pieces of green paper have value because everybody thinks they have value"
I'd make one small modification to the above.
The pieces of green paper have value because everybody's
thinks they have value agreed to accept them as a medium of exchange.
We all know those little green slips of paper have not real value. We've all just agreed to use them instead of barter.
As for Milton Friedman believing in inflation, he was in favor of a Constitutional Amendment limiting the growth of the money supply, so to say he was in favor of inflation is just not true.
