Monetarist Economist Friedman Dies

Milton Friedman, the Nobel prize-winning economist and Margaret Thatcher's monetarist guru, died today at the age of 94.

Mr Friedman died of heart failure after being taken to hospital near his home in San Francisco, his daughter, Janet Martell, said today.

His wife, Rose Friedman, who co-wrote many of his books, survives him.

A great believer in unfettered markets, Mr Friedman was the leader of the Chicago School of monetary economics. The central tenet of the school was that the money supply determined inflation.

As the flipside to his belief in the central role of markets, Mr Friedman, who won the Nobel prize in 1976, thought the role of government should be as limited as possible.

That view made him highly popular with free market devotees such as Margaret Thatcher and Chile's Augusto Pinochet, who relied on his advice as they put his ideas into practice.

Mr Friedman, however, later distanced himself from Mrs Thatcher's policy of cutting public-sector borrowing at a time of recession.

In 2003, he publicly declared in the Financial Times that monetarist policy had failed. "The use of quantity of money as a target has not been a success ... I'm not sure I would as of today push it as hard as I once did," he said.

Mr Friedman took his free market approach to its logical conclusion on various social issues, advocating the decriminalisation of drugs and prostitution.

An active Republican, Mr Friedman served as an informal economic adviser to Senator Barry Goldwater in his unsuccessful campaign for the presidency in 1964, to Richard Nixon in his successful 1968 campaign and to Ronald Reagan in his 1980 campaign.

His books included A Theory of the Consumption Function, The Optimum Quantity of Money and Other Essays, and (with A J Schwartz) A Monetary History of the United States, Monetary Statistics of the United States, and Monetary Trends in the United States and the United Kingdom. He was also a columnist for Newsweek magazine.