Anna Schwartz, one of the titans of monetarist economics, died on Thursday at the age of 96. Best-known for her collaborations with Milton Friedman on works such as A Monetary History of The United States, 1867-1960, she emerged late in her life as a strong critic of Federal Reserve chairman (and self-described acolyte) Ben Bernanke and the government bailout of financial institutions. She spent most of her career at the National Bureau of Economic Research.
Schwartz's life was a long, interesting, and always active one, reflecting and informing the intellectual and social changes of the past century (among them: the persistent assumption that she was always the lesser partner in her collaborations with Friedman, who credited her effusively throughout his life).
After five years at Columbia University's Social Science Research Council, Mrs. Schwartz joined the National Bureau of Economic Research in New York in 1941 and continued to work there for more than 70 years. But she maintained her ties to Columbia [she had graduated from Barnard], earning a Ph.D. there in her middle years.
It was at the National Bureau, a private, nonpartisan research organization that has been the nation's semiofficial arbiter of business cycles, that Mrs. Schwartz met Mr. Friedman and his wife, Rose Director Friedman, who was also an economist. Rose Friedman had heard from mutual friends that the Schwartzes might have a baby carriage to lend.
Arthur F. Burns, the president of the National Bureau and a future chairman of the Federal Reserve, suggested that Mrs. Schwartz and Mr. Friedman work together.
The two of them — she in New York and he at the University of Chicago — formed a close relationship based on exchanges of drafts and ideas by mail. "I'll write something and send it to him, and he'll criticize it, and he'll do the reverse," she told a reporter for The Times in 1970 on the publication of their second major work, "Monetary Statistics of the United States: Estimates, Sources, Methods." "The wonderful thing about this relationship is that neither of us takes offense if the other says it's no good."…
Even after breaking a hip in 2009 and having a stroke, Mrs. Schwartz, by then using a wheelchair, collaborated with [Rutgers economist Michael D. Bordo] and Owen Humpage, an economist at the Cleveland Fed, on a project tracing the history of governmental intervention in currency markets. "Anna never stopped," Mr. Bordo said.
She often spoke about her successful collaboration with Mr. Friedman on their "Monetary History of the United States," expressing elation that they had taken on an economic establishment with little regard for theories based on the importance of money.
Decades afterward, writing in The Cato Journal, a publication of the Cato Institute, the conservative public policy research organization, she quoted Wordsworth:
"Bliss was it in that dawn to be alive,/But to be young was very heaven!"
In a widely discussed 2008 interview with the Wall Street Journal, she pointedly dismissed the recapitalization of banks and the invocation of "systemic risk" as a trigger for bailouts:
"Firms that made wrong decisions should fail," she says bluntly. "You shouldn't rescue them. And once that's established as a principle, I think the market recognizes that it makes sense. Everything works much better when wrong decisions are punished and good decisions make you rich." The trouble is, "that's not the way the world has been going in recent years."
In 2009, Penn Bullock talked with Schwartz for a Reason article on Bernanke's monetarism, she castigated the Fed chair for what she saw as recklessly expanding the money supply and then surprisingly added this Keynesian prescription:
"People are saving, not spending. In order to revive this economy…" she paused, hesitating on the thought, "the government will have to resume spending. By spending, the government will require that the current inventory will be depleted and have to be replenished. And that will bring on additional production and jobs."