Readers of BATG will of course recognize the name Milton Friedman and may also be familiar with the name John Bogle as well.  Friedman (1912-2006) was an American economist who spent most of his academic career at the University of Chicago.  He was a strong proponent of monetarism and was awarded the Nobel Prize in Economics in 1976.   He became well known to the mainstream public through some of his writings, particularly the book Free to Choose and its accompanying PBS ten-part series (1980).  He was an enthusiastic and capable communicator of economic concepts to the public.

John Bogle (1929 – 2019) is considered the popularizer of index mutual funds and was the founder of The Vanguard Group and its CEO for many years.  During his life, Bogle continued to promote low-cost investing, simplicity, and holding rather than active trading.

In the last several months, I had the opportunity to listen to/read books by both of these men.  While written a number of years ago, I found the books to still be relevant in today’s economic and finance landscape. 

Friedman’s Money Mischief: Episodes in Monetary History (1994) discusses major topics related to money and provides some history of money…what it is, what has been used for money, its supply and demand, etc.  He spends several chapters discussing money in the post-Civil War years and issues related to Bimetallism.

To me, the more interesting chapters of Money Mischief relate to more recent times.  Some examples: he claims that hyperinflation (along with corruption and bad financial management) were causal factors of the defeat of Chiang Kai-shek and the Nationalists in mainland China and helped sweep the communists into power. While Money Mischief was written (1994) before the introduction of the euro (1999), Friedman expresses his preference for a single currency over pegged currencies between European sovereign nations. 

Chapter 8 is perhaps the pivotal chapter in the book (The Cause and Cure of Inflation) – and is a revised version of a chapter from Friedman’s book Free to Choose.  In this chapter, he debunks several commonly held explanations of inflation including labor unions, businessmen, inflation imported from abroad and low productivity.   Rather, he states here that inflation is “primarily a monetary phenomenon that is produced by a more rapid increase in the quantity of money than in output” (p.204).  Elsewhere he asserts that “inflation is always and everywhere a monetary phenomenon…” (p. 49).  Further he opines that he knows of no historical example where substantial inflation lasting for more a brief amount of time that was not accompanied by a rapid increase in the quantity of money (p.195).  [my comment: Where are today’s economists following the relationship between money growth and inflation?]

The work by Bogle entitled Enough: True Measures of Money, Business and Life (2009) outlines several principles that he believed in, around which he led his mutual fund organization. He organizes his book around ten key principles, stated in pithy chapter titles, such as ‘Too Much Complexity, Not Enough Simplicity’ (referencing William of Occam – “When confronted with multiple solutions to a problem, choose the simplest  one”(p.71) ) or ‘Too Much “Success”, Not Enough Character’ (“…those of us who have chosen business careers continue to ask ourselves whether we’re chasing the fake rabbit of success or the real rabbit of meaning….)” (p.218).  In the chapter ‘Too Much Cost, Not Enough Value’, Bogle claims that there is a “disconnect between cost and value in our financial system” (p.41).  While valuing the field of finance, he suggests that it is derivative from other fields.    He critically evaluates and at times even laments the state of modern finance and issues a call to stewardship (and less salesmanship).

While Mr. Bogle does use some Scriptural passages, I do not know his faith story.  Interestingly, it is reported that in many years of his working life, he ­­gave half of his income to charity.  At one point, he intriguingly asks this question:   Where are the things by which one measures one’s life? (p. 185).  To this, believers would state guiding principles such as “for God’s honor and the flourishing of others” or as the Westminster Confession states, “Man’s primary purpose is to glorify God, and to enjoy him forever.”

 It has been said that our lives change at least in part due to the people we meet and the books we read. It was a privilege to spend time with these giants and be reminded of principles and concepts that stand the test of time well.  What is new is not always better.