Milton Friedman and Anna Schwartz demonstrated beyond a doubt, in A Monetary History of the United States, 1867-1960, that what was indeed a difficult situation in 1930, 31 was converted into an economic disaster by planners at the Fed. “Mistakes…cannot be avoided in a system which disperses responsibility yet gives a few men great power, and which thereby makes important policy actions highly dependent on accidents of personality,” Friedman concluded. (Bernanke admitted in front on Congress – “We did it.”)
Yet here we go again.
In the 60’s and 70’s Friedman felt that targeting the money stock was as good as any known tool at that time, to take the discretion away from Fed planners because to paraphrase Clemenceau – money is much too serious a matter to be left to the Central Bankers.
As it turned out, the aggregates were not the best target but then Friedman himself noted that we would improve as we moved along. “I do not regard my particular proposal as a be-all end-all of monetary management..,” he wrote in Capitalism and Freedom. Our personal preference is a simple price target but whatever it may be We Need One Now.
Yellen and others like her are a threat to all of us. We need a rule; we don’t need their opinion.
Friedman: “Such a rule seems to me the only feasible device currently available for converting monetary policy into a pillar of a free society rather than a threat to its foundations.”
Robert Craven
Yet here we go again.
In the 60’s and 70’s Friedman felt that targeting the money stock was as good as any known tool at that time, to take the discretion away from Fed planners because to paraphrase Clemenceau – money is much too serious a matter to be left to the Central Bankers.
As it turned out, the aggregates were not the best target but then Friedman himself noted that we would improve as we moved along. “I do not regard my particular proposal as a be-all end-all of monetary management..,” he wrote in Capitalism and Freedom. Our personal preference is a simple price target but whatever it may be We Need One Now.
Yellen and others like her are a threat to all of us. We need a rule; we don’t need their opinion.
Friedman: “Such a rule seems to me the only feasible device currently available for converting monetary policy into a pillar of a free society rather than a threat to its foundations.”
Robert Craven
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