Ep 3. Anatomy of Crisis

Free To Choose aired as a television series in the year 1980. The show had a total of 10 episodes, each of which tackled a different aspect of the free-market economy. One of these episodes, titled 'Anatomy of Crisis,' takes a closer look at economic crises and how they can be avoided.

The episode starts with the host, economist Milton Friedman, discussing the reasons why economies are prone to crises. He highlights that governments have a tendency to intervene too much in the economy, leading to regulations and policies that distort the market. These distortions, in turn, can lead to imbalances in the economy, causing a crisis.

Friedman goes on to explain the concept of inflation and its effects on the economy. He argues that inflation is caused by an excessive increase in the money supply, which leads to a decrease in the value of money and ultimately results in rising prices. He warns that if inflation is not controlled, it can lead to hyperinflation, creating a situation where prices skyrocket, and the economy collapses.

The episode then focuses on the example of the United States in the 1970s, when the country was facing a period of stagflation, which is a combination of high inflation and high unemployment. Friedman discusses how the government's attempts to intervene in the economy and control inflation were actually contributing to it.

Friedman highlights that the key to avoiding crises lies in creating a free market where businesses are allowed to operate without government intervention, regulations, and price controls. He argues that when the market is allowed to operate freely, it will naturally correct imbalances, preventing crises from occurring.

In the latter half of the episode, Friedman discusses the role of the government in the economy. He argues that while the government has a role to play in ensuring a stable currency and creating a legal framework for businesses to operate, it should not be involved in setting prices, controlling wages, or interfering with the market's natural pricing mechanisms.

Friedman concludes the episode by stressing that crises are not inevitable and can be avoided by creating a free market with minimal government intervention. He highlights that the key to achieving this lies in educating people about the benefits of a free-market economy and the dangers of government intervention.

Overall, 'Anatomy of Crisis' is an insightful episode that provides a deep understanding of economic crises and their causes. The episode presents a compelling argument for the importance of free markets and limited government intervention in the economy. It is a must-watch for anyone interested in economics, politics, or the workings of the free-market economy.