Leo Melamed writes:

I asked him [Friedman] whether he would endorse–when Bretton Woods collapsed–the concept of futures contracts in foreign exchange.  Without hesitation, Dr. Milton Friedman embraced the concept and authored a study in December 1971 which became the intellectual foundation for the birth of currency futures.  It was not a major treatise, hundreds of pages long with footnotes and a bibliography.  The world-renowned economist stated all he needed to say in just 11 pages.  His paper, entitled "The Need for Futures Markets in Currencies," provided us with academic authenticity of the highest magnitude to prove that our theory was a viable necessity.  As I often stated, "Professor Friedman gave my idea the credibility without which the concept might never have become a reality."  For with Dr. Friedman’s paper in hand, I was able to convince government officials, bank presidents and the CME brokerage community that the idea had merit.

This is an excellent illustration of Alex’s point that Milton was an entrepreneurial economist.  Here is more. 

Milton had been right all along that flexible exchange rates were entirely workable.  He was wrong in underestimating their volatility through periodic, and possibly inexplicable, "long swings" in the levels.  Oddly, his mistake on this point probably enabled currency futures and options to be even more successful than he had expected.

Addendum: Here is Greg Mankiw on Milton, here is Arnold Kling.  Here is a link fest at PrestoPundit.  Here is a misleading piece on Milton as friend of big government; just ask Roger Douglass, Vaclav Havel, or many others.

Econoblog.

Great economist by day and crusading public intellectual by night, Milton Friedman was my hero.  Friedman’s contributions to economics are profound, the permanent income hypothesis, the resurrection of the quantity theory of money, and his magnum opus with Anna Schwartz, A Monetary History of the United States, 1867-1960, all stand as great achievements.

But Friedman did not restrict his genius to the academy, he used economics to forcefully argue for a better world.  Friedman was a key player in ending the draft, he championed school choice and drug legalization.  He not only wrote about floating exchange rates he helped to bring them into being.  The end of welfare as we know it?  Friedman’s negative income tax was an inspiration.

Milton Friedman loved liberty.  Even today, chills run down my spine whenever I read the slashing opening to Capitalism and Freedom. 

President Kennedy said, "Ask not what your country can do for you – ask what you can do for your country."… Neither half of that statement expresses a relation between the citizen and his government that is worthy of the ideals of free men in a free society.

Damn right.

On a personal note, Friedman inspired my book, Entrepreneurial Economics: Bright Ideas from the Dismal Science, in which I said Milton Friedman was the greatest entrepreneurial economist of the twentieth century.  It was thus a real thrill for me and a bringing around of the circle when I sent him a draft and he wrote back praising the book (see the back cover!).

He will be missed.

When I think of Milton Friedman, I often think first of — oddly enough — his essay on a commodity reserve currency.  This not-quite-famous piece of 1951 does not bear on current policy debates, and it did not much influence the world.  The idea of backing a money with a commodity bundle wasn’t going to happen anyway.

But it shows one of the sides of Milton I most admire, namely his razor-sharp logic and his ability to get to the core of an idea and pick it apart.  It is a model of understanding and argumentation.  I read this piece and quake with fear that I might someday disagree with Milton and be disassembled in a quick debate, if the word debate could even be said to apply.

Milton’s critics sometimes portray him as a monetary dogmatist, but this was never the case.  The early Milton favored one hundred percent reserve banking, in part as a reaction against the bank failures and excesses of the Great Depression.  I read the commodity basket piece as breaking his ties to the commodity money idea, an old (and perhaps outdated?) piece of classical liberal thought.

The mid-period Milton favored a fixed rate of monetary growth.  The Milton Friedman of 1969 considered the idea of deflation — an "optimum quantity of money" — although it is not clear he ever endorsed that proposal.  The Milton Friedman of 1986 Friedman and Schwartz toyed with ideas of free banking.  The very late period Milton Friedman was moving toward the notion of an inflation rule, as monetary targeting had not worked.

Milton was always on a quest toward a greater truth.  If an argument ran against him — and usually it didn’t — he would submit and pick up the pieces in a purely forward-looking manner.

I think often of Milton’s essay on commodity reserve currency.

www.ebooboos.com is devoted soley to finding spelling mistakes, and thus underpriced assets, on ebay.com.

Here is my previous post on that topic.