I was honoured to be one of the signatories of a letter which was sent to the Queen last month, a response to the British Academy’s letter to her which sought to address her question as to why no-one had seen the economic meltdown coming. Here is the text of the letter in full.

Open Letter to the Queen: 14th August 2009

Your Majesty,

We, the undersigned, noted with interest the letter to Your Majesty of 22nd July 2009 from the British Academy in which they respond to your question about how the current economic meltdown was missed. They talked of a “failure of the collective imagination of many bright people” and a “psychology of denial”.

The Academy wrote “It is difficult to recall a greater example of wishful thinking combined with hubris.”

“Friedman dreamed of depatterning societies,” Ms. Klein reminds us, “of returning them to a state of pure capitalism, cleansed of all interruptions—government regulations, trade barriers and entrenched interests.” The problem was that though Friedman claimed his ideology went hand in glove with spreading democracy, “free people just didn’t seem to vote for politicians who followed his advice.”

“Friedman is surely no anarchist … He recognizes that any society needs laws, and that legislation and enforcement of the law are proper roles for government in a free society.” Friedman himself acknowledged cases where, for instance, government regulation or a public monopoly may be preferred to private monopoly (e.g., in money creation, which should be exclusively the perogative of government and never delegated to private banks to create using fractional reserve lending practices as is the present case) and noted numerous areas where he believed government intervention is necessary:

“A government which maintained law and order, defined property rights, served as a means whereby we could modify property rights and other rules of the economic game, adjudicated disputes about the interpretation of the rules, enforced contracts, promoted competition, provided a monetary framework, engaged in activities to counter technical monopolies and to overcome neighborhood effects widely regarded as sufficiently important to justify government intervention, and which supplemented private charity and the private family in protecting the irresponsible … would clearly have important functions to perform. The consistent [classical] liberal is not an anarchist.”


Monetarists do not generally support government intervention in the markets as this is contrary to a properly functioning free market system. However, if the economic system is already warped by special interests and private monopolistic practices (such as the financial system in the US is and has been since the passage of the Federal Reserve Act of 1913 cabalizing the US banking industry and allowing their cabal to create money using fractional reserve banking) then monetarists inevitably want to see balance and justice restored to the free market system, in this case by abolishing the Fed and withdrawing from participation in the BIS/IMF/World Bank combination.

Monetarists are neither supporters of socialism nor monopoly capitalism. They are instead supporters of the third way – the free market system – which opposes both aforesaid forms of economic totalitarianism. Friedman was a monetarist and a strong supporter of the free market system (even in the educational system by supporting use of school vouchers).

In the current economic setting, Freidman’s writings suggest that cutting spending to reduce the fiscal deficit would result in less transitional unemployment than raising taxes to do so. In other words, the solutions proposed by the Bush and Obama administrations of massive government intervention in the markets will prolong unemployment compared to reducing government spending (which is diverting national resources away from productive industry).

At the same time Friedman, a strong supporter of transparency, would undoubtedly support Congressman Ron Paul’s push to audit and to end the Fed. He supported prohibition of fractional reserve banking and withdrawing the US from the BIS/IMF/World Bank global equivalent of the Fed (as his support of our Monetary Reform Act which advocates exactly that demonstrates [see Monetary Reform Act Sections 4 and 15 excerpted below this article]). The BIS is responsible for this current recession/depression and with the US Fed has misused its control of great wealth and resulting influence radically to tilt the economic system in the favor of the major international banks and against all other economic sectors. This threatens to subject the political liberty of the entire world to BIS supra-governmental economic regulations since political liberty depends upon private control of private property.

Just as in the Great Depression (renamed the Great [Credit] Contraction by Friedman), the government caused the current severe recession/depression by implementing the BIS Basel II regulations and is again applying “the wrong cure for the wrong disease.” The right cure is to abolish the Fed, prohibit fractional reserve banking and withdraw from the BIS/IMF/World Bank supra-government that initiated this economic crisis. The international banks behind these financial bodies have manipulated the financial system of the world to aggregate more and more wealth into their hands, concentrating vast economic power and hence political power under their control.

What Friedman wrote regarding the US Fed, quoted above, is even more germane to the international combination of the BIS/IMF/World Bank:

“Any system which gives so much power and so much discretion to a few men, [so] that mistakes ‑‑ excusable or not ‑‑ can have such far reaching effects, is a bad system. It is a bad system to believers in freedom just because it gives a few men such power without any effective check by the body politic ‑‑ this is the key political argument against an independent central bank. . .To paraphrase Clemenceau: money is much too serious a matter to be left to the Central Bankers.” – Milton Friedman