Yeah, it's all pretty much horseshit. He did, in fact, denounce Pinochet.
http://libertyunbound.com/archive/2007_02/ramsey-friedman.html
‘I do not regard it evil for an economist to render technical economic advice to the Chilean government to help end the plague of inflation, any more than I would regard it as evil for a physician to give technical medical advice to the Chilean government to end a medical plague.’
http://www.reason.com/news/show/117278.html
While there, Friedman did have one meeting with Pinochet, for less than an hour. Pinochet asked Friedman to write him a letter about his judgments on what Chilean economic policy should be, which Friedman did . He advocated quick and severe cuts in government spending and inflation, as well as instituting more open international trade policies—and to “provide for the relief of any cases of real hardship and severe distress among the poorest classes.” He did not choose this as an opportunity to upbraid Pinochet for any of his repressive policies, and many of Friedman’s admirers, including me, would have felt better if he had.
But that was the extent of his involvement with the Chilean regime—and it fit with a recurring pattern in Friedman’s career of advising with an even hand all who would listen to him. It was not a sign of approval of military authoritarianism. Friedman, in defending himself against accusations of complicity with or approval of Pinochet, noted in a 1975 letter to the University of Chicago school newspaper that he “has never heard complaints” about giving aid and comfort to the communist governments to which he had spoken, and that “I approve of none of these authoritarian regimes—neither the Communist regimes of Russia and Yugoslavia nor the military juntas of Chile and Brazil. But I believe I can learn from observing them and that, insofar as my personal analysis of their economic situation enables them to improve their economic performance, that is likely to promote not retard a movement toward greater liberalism and freedom.”
http://www.pbs.org/wgbh/commandingheights/shared/minitextlo/int_miltonfriedman.html
INTERVIEWER: When you were down in Chile you spoke to some students in Santiago. In your own words, can you tell me about that speech in Santiago?
MILTON FRIEDMAN: Sure. While I was in Santiago, Chile, I gave a talk at the Catholic University of Chile. Now, I should explain that the University of Chicago had had an arrangement for years with the Catholic University of Chile, whereby they send students to us and we send people down there to help them reorganize their economics department. And I gave a talk at the Catholic University of Chile under the title "The Fragility of Freedom." The essence of the talk was that freedom was a very fragile thing and that what destroyed it more than anything else was central control; that in order to maintain freedom, you had to have free markets, and that free markets would work best if you had political freedom. So it was essentially an anti-totalitarian talk. (amused)
INTERVIEWER: So you envisaged, therefore, that the free markets ultimately would undermine Pinochet?
MILTON FRIEDMAN: Oh, absolutely. The emphasis of that talk was that free markets would undermine political centralization and political control. And incidentally, I should say that I was not in Chile as a guest of the government. I was in Chile as the guest of a private organization.
