Chicago May 22nd (1952): Had lunch with Milton Friedman and Aaron Director at the Quadrangle Club.  Had a long discussion about the theory and practice of fluctuating exchange rates.  I tried in vain to persuade Friedman that he ought to add some form of large official exchange equalisation fund to his schemes for freely fluctuating exchange rates.  But we both agreed how much more difficult it was to get any hearing for the idea of fluctuating exchange rates in London than in the United States.  I fear it is fundamentally because the English have, I hope temporarily, lost all their belief in liberalism and the use of the price mechanism.