In the course of reading about Paul Krugman and his recent NYT Magazine piece, I decided to Google for his 2007 New York Review of Books piece on Milton Friedman, which has a link to the reply from Anna Schwartz and Edward Nelson.
It seems like part of the acrimony concerns defining what monetarism is or was, and I'm still confused. I think Krugman thinks monetarism is a rejection of the notion (which we teach in college-level macroeconomics today) that the central bank can fight inflation or recessions by changing the real interest rate. I guess I'm not so sure that's clear. Friedman and Schwartz clearly stated that the Fed worsened deflation and the Great Depression through monetary policy. I can't imagine they could have felt that somehow monetary policy only worked in one direction and not the other; but it's clear that anybody can have an opinion about when it's prudent to try.
In the Fall of 2008, Anna Schwartz spoke at the CUNY Graduate Center about the financial crisis, and she argued that monetary policy should be allowed to work. (She also thought the Fed was fighting "the last recession" and not the current one, which is pretty hard to disagree with but also not all that constructive.) I blogged about her interview last year in the Wall St. Journal here.
Another acrimonious element seems to resolve around distortions, in the sense of being disingenuous about research in the defense of a particular viewpoint, and not market distortions, but the latter pun is apt. On this front, it's hard to avoid the perspective that Paul Krugman's pot is calling Friedman's kettle black.
