Remembering Milton Friedman - A Eulogy

Milton Friedman is widely known as a brilliant teacher and theoretical economist, but he was also intensely interested in the practical application of his theoretical analysis. In this eulogy, given at the Institute of Economic Affairs (I.E.A.) in London soon after Friedman’s death, I recall two striking examples of these aptitudes. First, anticipating the breakdown of the Bretton Woods system of fixed exchange rates, he advocated the introduction of currency futures by the Chicago Mercantile Exchange. These instruments have subsequently become indispensable for portfolio managers and currency traders around the world. Second, although Friedman was renowned for his advocacy of floating exchange rates, he was also at the same time an advocate of fixed exchange rate systems, or currency boards, for small open economies. This idea led to his direct involvement with the stabilization of the Hong Kong dollar after its collapse in 1983. Friedman’s mastery of academic economic analysis no doubt reinforced his confidence in the implementation of those ideas.