Anyone who has actually read Monetary History is going to be way, way more interesting than those that get their economics from internet memes, slogans, and journalists.
The book's central thesis is that Fed monetary policy made the depression worse. That is widely accepted by economists of all stripes.
However, Friedman also argues that the Fed should boldly step in as a lender of last resort. He ignores the fact that no institution can make a realistic solvency determination during a crisis. What that means in practice is he supports things like TARP.
This amounts to a statement that the cost of financial panics (which are an inherent characteristic of all systems with maturity transformation) should be born by the public rather than the financial sector. That is a political decision, not a technical economic one.
A lot of economics from the Friedman era is about clothing political choices in technical jargon.
I don't think either of these sentences are true. Friedman wasn't for bailouts for those that did wrong, he simply knows that a deflationary spiral can occur if there is a cascading banking failure. Which is what happened in the Great Depression, and what was avoided in 2007/08. It should also be noted that TARP made the public money.
> Should be born by the public rather than the financial sector.
That is also not true. The issuer of money explicitly a tool of the government (even if the Fed itself is technically private.) The reason the Fed has to step in, is because the actual equation for money supply includes the velocity of money. If economic activity crashes, the money supply goes down. That is accelerated further due to complex financial instruments such as derivatives. The Fed shoring up balance sheets with low interest loans alleviates that during economic downturns. There is a side effect that some firms are able to use this opportunity to enrich themselves, but it is rarely at a great cost to the public, relatively speaking.
Banking systems have multiple equilibria [1]. That is one way of saying that financial crises are like floods. They are a fact of life, and happen from time to time.
Who should pay for flood insurance, the public or the people building on flood plains?
If the public pays for the flood insurance, there will be too much construction in the flood plain.
The fact that TARP provided a small accounting profit to the Treasury is sort of immaterial. It was a free put that was never exercised. People should pay a premium for insurance. An efficient market prices risk...
[1] https://en.wikipedia.org/wiki/Diamond%E2%80%93Dybvig_model
Given the size of the financial sector, I am not sure those are not all that different.
Financialization occurs when you can be explicit about costs and benefits. Finance does it with dollars, IT does it with bytes.
There is certainly a case to be made that it's gone too far. But honestly you should be pleased if people can move billions of dollars to a positive end with a mouse click.
Stock values follow profit. If the finance industry can encompass 100% GDP and break down everything into profit and costs that can be allocated to the individuals with the correct risk profile, we're doing extremely well.
There are ideologically pro-finance economists who strongly reject this assessment [1].
[1] https://www.ft.com/content/4b70ee3a-f88c-11e4-8e16-00144feab...
I do however doubt there are many economists who would be against the idea of digitizing cash flows, losses, and profits. It just makes for more efficient decision making. The two - ideally - aren't materially different.
It mitigates a crisis, but sets up horrible long-term incentives.