Even so, Milton Friedman (1912–2006), a colleague of von Hayek’s at the University of Chicago, was more important as an immediate influence on Reagan and on the remaking of U.S. and international economic policy in a neoliberal direction during the 1980s. Friedman was the leading theorist of what is called the monetarist school of economic thought. Friedman found a close link between inflation and the money supply. Inflation, he said, can be controlled by limiting the amount of money in the national economy, a function performed in most Western countries by the central bank, as with the Federal Reserve Bank in the United States or the Bank of England in Britain. Friedman rejected government fiscal policy as a tool of demand management and thought that the government’s role in guiding the economy should be limited to adjusting interest rates (see our earlier discussion on Keynesianism). Friedman set monetarism within a historical vision that “the two ideas of human freedom and economic freedom working together came to their greatest fruition in the United States” (Friedman and Friedman 1979: 309). He thought that Americans are imbued with freedom as part of the very fabric of their being but that they have strayed from this principle, forgetting that the greatest threat comes from concentration of power in the hands of government. Friedman argued that the Great Depression, or “Great Contraction” as he called it, had not been a failure of the free enterprise system but instead originated in a tragic failure of government. Friedman (1958) thought that “millions of able, active and vigorous people exist in every underdeveloped country” and “require only a favorable environment to transform the face of their countries” within neoliberal policies aimed at creating “more competitive markets with brave, more innovative entrepreneurs.” This idealistic right-wing thinking took over from a previously liberal state-interventionist development economics during the 1970s and early 1980s (Straussman 1993; Toye 1987). Friedman lectured in Chile during the military dictatorship of Augusto Pinochet, when thousands of leftists were murdered by the state. Professors from the Chicago School of Economics were advisers to the Chilean government, and Chicago graduates, known as “the Chicago boys,” served in the Chilean state ministries. Despite this participation in a murderous regime, the Bank of Sweden awarded Friedman the Nobel Prize in 1976 “for his achievements in the fields of consumption analysis, monetary history and theory and for his demonstration of the complexity of stabilization policy.” (All together, five members of the Chicago school have been awarded the Nobel prize in economics—note that the economics prize is awarded by the Bank of Sweden and not by the Nobel Foundation.) Friedman was a member of Reagan’s Economic Policy Advisory Board in 1981. After retiring, Friedman went to the Hoover Institute at Stanford University, a think tank closely allied with the Reagan administration.