Tape 64 - Economic Development, Constructive Money, Growth

Download
- Rights
- Limited Re-Use
  CC BY-NC 4.0
  More Rights Info
- Files (1)
- MP3
- Please be patient with media downloads. They are often large files.
Share

Embed Code
<iframe src='https://idn.duke.edu/ark:/87924/r43f4m45n?embed=true' height='125px' width='100%' frameborder='0' marginwidth='0' marginheight='0' scrolling='no' loading='lazy' allowfullscreen></iframe>
Permalink

https://idn.duke.edu/ark:/87924/r43f4m45n
Skip to Item Info

Loading the media player...

Files for this Item

Transcript

Transcripts may contain inaccuracies.

-	Hello, this is Instructional Dynamics	0:02
	inviting you to another of our biweekly interviews	0:05
	with Dr. Milton Friedman, professor of economics	0:08
	at the University of Chicago.	0:10
	We are taping this interview on Thursday, December 31st.	0:12
	Professor Friedman,	0:17
	is there anything new on the economic front?	0:18
-	Well, before I answer that,	0:20
	given the date, let me wish all of our subscribers	0:22
	a very happy and prosperous new year.	0:27
	On the whole, as my most recent tape	0:31
	giving the forecast indicates,	0:34
	I think that there are good prospects,	0:37
	that this will be	0:40
	a much better year than most people anticipate.	0:41
	I believe that we are likely,	0:45
	as I indicated in my last tape,	0:46
	to have a fairly substantial expansion	0:48
	during the course of this year,	0:51
	with a continuing	0:53
	reduction in the rate of inflationary price rise.	0:55
	So far as anything new since my last tape,	0:59
	there is very little.	1:02
	The year end is almost always a confused period,	1:03
	when there isn't very much active going on,	1:06
	and moreover, we are now at that state of the	1:07
	economic fluctuations, in which	1:11
	there is not a great deal to be said,	1:14
	a statement, in my opinion,	1:16
	we're near the bottom of a turning point	1:18
	and when, for quite a long time to come,	1:20
	if this view is right, there will be little to be said,	1:22
	except the fact that things are continuing to	1:25
	expand and go up.	1:28
	On the economic front, one thing that might be stressed	1:30
	is that the most recent several weeks	1:34
	of the monetary figures	1:37
	have shown a rather substantial rise	1:38
	in the quantity of money.	1:43
	Now as my subscribers know very well by now,	1:44
	this is a very erratic thing,	1:47
	and you do have wide ups and downs from week to week.	1:49
	But nonetheless, as far as they go,	1:53
	the figure suggests that the Fed is trying to make up	1:56
	for the rather slow rate of growth during the months of	1:59
	October and part of November and is going back up.	2:03
	The real question and the real issue will come	2:08
	over the next few months,	2:10
	whether the Fed has succumbed	2:12
	to the great political pressures that are bearing on it,	2:15
	to expand the quantity of money at a much more rapid rate	2:19
	than the five percent which they have in general	2:22
	taken as their goal,	2:25
	or whether they will resist this pressure	2:26
	and keep to a course which will, in my view,	2:28
	continue to provide the monetary basis	2:34
	for a moderate expansion	2:36
	without reawakening inflationary pressures.	2:38
	I still think that's up in the air.	2:40
	Insofar as one can say anything on the basis of sort of	2:43
	a spread of commentaries and comments	2:46
	in the papers and so on,	2:49
	it does look as if there is a little shift	2:50
	in the climate of opinion within Washington,	2:53
	as if within the administration, there has been some move	2:55
	away from the kind of panic that was developing	2:58
	shortly after the elections,	3:02
	a panic which was leading	3:05
	people to take positions	3:07
	quite different from their usual positions,	3:09
	leading some of the people like	3:11
	some of the members of the Council of Economic Advisors	3:13
	to urge rates of increase in the quantity of money	3:16
	of eight to ten percent.	3:18
	It seems as if there has been some shift away from that.	3:20
	A greater sense of realism and of moderation	3:23
	and of perspective on the part of the White House	3:25
	and of the administrations	3:27
	so that they are reconciling themselves	3:30
	to a slower rate of monetary growth	3:32
	and to a longer, spread out return	3:35
	to a position of high employment simultaneously	3:38
	with the tapering off of inflation.	3:42
	But all of that is mostly	3:44
	in the feel of the situation and the tone of the comments.	3:48
	Its hard to document it by any hard facts.	3:51
-	You have been identified with the policy	3:55
	of a constant rate of monetary growth.	3:57
	In a recent tape, your colleague, Paul Samuelson,	4:00
	discussed this policy and argued rather strongly against it.	4:03
	Would you care to comment?	4:07
-	Yes, I would be very glad to comment.	4:08
	I may say that this.	4:11
	First, let me	4:12
	say exactly what my policy position is and has been.	4:14
	I have, in recent years, been in favor	4:17
	of a policy under which, for the U.S.,	4:20
	the quantity of money	4:24
	would grow at a rate of somewhere around	4:26
	three to five percent per year,	4:28
	steadily, month in, month out, year in, year out.	4:30
	Now this policy needs to be defined	4:34
	in much greater precision,	4:37
	and I have in	4:38
	various of the writings in which I've presented it	4:40
	defined it in greater precision.	4:42
	It has to be defined	4:44
	first as to what money concept you're talking about,	4:46
	whether M1, M2, M3, M4, et cetera.	4:49
	And here, in general, I have based this recommendation	4:53
	on a money concept	4:57
	which is broader than M1,	5:02
	which includes time deposits in commercial banks,	5:03
	but which excludes CDs.	5:06
	This is the concept,	5:09
	that money total has been growing at something like	5:11
	eight to nine percent over the past year,	5:14
	so it's been growing much more rapidly than my long-term	5:16
	desired rate of growth.	5:21
	In the second place,	5:24
	one has to specify whether he's talking about	5:26
	seasonally adjusting money stocks,	5:29
	non-seasonally adjusting money stocks or not.	5:30
	This turns out to be an extremely important practical issue,	5:33
	because in fact, the seasonal movement in the money stock	5:36
	is not a natural phenomenon,	5:40
	but it is something which the Fed puts into it	5:42
	and something which has time and again	5:45
	confused Federal Reserve policy.	5:47
	And my own position has been in favor	5:48
	of a growth in seasonally unadjusted money supply	5:53
	at a steady rate of no attempt on the part of the Fed	5:59
	to compensate for seasonal movements	6:02
	in the total money supply,	6:04
	but to let that be taken up	6:06
	in seasonal movements and interest rates.	6:07
	Now I should qualify that in one respect.	6:10
	While not altering	6:13
	the rate of growth of the total money supply	6:16
	for seasonal purposes,	6:18
	it would be perfectly consistent for the Fed to adapt	6:20
	to whatever proportions of currency versus deposits	6:22
	is desired.	6:26
	For example, there is no doubt that	6:26
	during the end of the year period,	6:28
	during the Christmas shopping season,	6:30
	there is a tendency for currency to go up	6:32
	relative to deposits.	6:34
	And there is every reason	6:36
	why the Fed should accommodate that.	6:37
	That is, the public should be able to hold whatever	6:39
	its total money stock,	6:42
	in whatever proportions it desires	6:44
	as between currency on the one hand	6:46
	and deposits on the other.	6:48
	But beyond that, I have been in favor of no	6:50
	seasonal movement.	6:52
	Let me say one more thing.	6:58
	This is not the position I've always held.	6:59
	In fact, in a paper which I wrote in 1946,	7:03
	at the end of the war on a monetary framework	7:07
	for economic policy, for stability,	7:11
	I've forgotten the exact title,	7:16
	but it has some such title as that,	7:17
	A monetary framework for economic stability,	7:19
	I believe it's called.	7:22
	In that article, incidentally,	7:23
	an article in which I also introduced the concept	7:25
	of full employment, high employment surpluses	7:28
	and deficits about which so much is being heard of nowadays.	7:30
	In that article, I had a much more sophisticated policy,	7:34
	one which involved not a steady rate of growth	7:38
	in the quantity of money,	7:41
	but a rate of growth which would automatically rise and fall	7:42
	depending on government budget.	7:45
	That is, that policy involved a stabilizing budget policy.	7:47
	It involved having the government enact taxes	7:51
	and expenditure programs from a long-run point of view,	7:55
	which would mean that if there was a recession,	7:58
	you would tend to have a deficit.	8:01
	If there wasn't, boom, you would tend to have a surplus	8:02
	and then financing the defect by printing money	8:05
	or letting the surplus reduce the quantity of money.	8:08
	And this would have produced	8:11
	a cyclical movement in money supply.	8:13
	I have been led to shift away from that	8:15
	not because of the beliefs that it wouldn't be	8:18
	a reasonably satisfactory policy,	8:20
	but by the belief that it was much more	8:22
	sophisticated and complicated than was necessary.	8:23
	All of the economic and monetary research	8:26
	which I have done since that time	8:29
	has led me to believe that you don't need anything like so	8:30
	sensitive and sophisticated a policy	8:33
	to eliminate the major mistakes of monetary management	8:35
	and to give a pretty good basis for a stable society.	8:38
	Well, let me go back.	8:40
	My present policy, as I say,	8:42
	is and has been for some time now,	8:44
	this long run policy with a stable rate of growth.	8:46
	Now I emphasized that it was about three to five percent	8:49
	and that it was in M2 in a broader total,	8:52
	not what we're now doing because I wanna add one more point.	8:55
	The question is, given that you've been on	9:01
	a very different pattern of policy,	9:03
	given that you have been expanding the money supply	9:05
	at a much faster rate than that,	9:07
	what's the transition period by which you get	9:10
	to your long run desired basis?	9:12
	And here, I think I found it very much harder	9:16
	to be definite on that.	9:25
	If you are only a little bit away from your long run policy,	9:27
	I have always thought that it might be best	9:30
	simply to go to your long run policy and stick there.	9:32
	But by 1968, end of 1968,	9:34
	we had become very far indeed away from our long run policy.	9:38
	And therefore, it has seemed to me desirable since then	9:42
	to return, to get to the long run policy,	9:45
	not in one step but in a number of steps,	9:47
	to move gradually toward it	9:50
	rather than making a sudden jump.	9:51
	And that's why, in the past year or so,	9:54
	I have not, in fact, been advocating	9:57
	a rate of growth of M2	9:59
	of the broader money supply of five percent,	10:01
	but I have been accepting as tolerable	10:03
	and as reasonably satisfactory the Fed's own goal	10:06
	of something like five percent in M1	10:10
	which has been combined with something like	10:12
	eight or nine percent in M2.	10:14
	I think that is alright as an interim goal	10:19
	while we're tapering off this inflation,	10:21
	but I think that we must be prepared after a time	10:23
	to make another shift	10:26
	and at such a rate of growth of M1 of five percent.	10:29
	If indeed it is accompanied by a rate of growth	10:33
	of eight or nine percent in M2	10:35
	for the various technical reasons that it involves,	10:38
	it would be likely over the longer period	10:40
	to be an inflationary policy	10:43
	and would not in fact give an objective	10:45
	of a low rate of inflation.	10:48
	One more point along these lines.	10:53
	One of the things I have always emphasized	10:55
	in my advocacy of a constant rate of growth	10:57
	is that the constancy of the rate	11:00
	is much more important than the level,	11:02
	that it would be better to have a constant rate of growth	11:04
	that was seven percent a year, let's say,	11:07
	and keep it there indefinitely	11:10
	than it would be to have a rate of growth	11:12
	which averaged five percent	11:14
	by virtue of sometimes being 10%	11:15
	and sometimes being zero percent	11:17
	because it is the fluctuations in the rate of growth	11:19
	that introduce fluctuations in the economy	11:22
	and prevent the economy,	11:24
	prevent a stable set of expectations from being	11:27
	established that can be maintained indefinitely.	11:32
	So, to repeat, my objective is a steady rate of growth,	11:36
	ultimately at a rate of something like five percent in M2,	11:39
	currency plus time deposits other than CDs,	11:43
	as an interim matter, perhaps five percent in M1,	11:47
	but with the idea of later shifting on down to M2.	11:49
	Now what's wrong with this policy?	11:53
	Well, Professor Samuelson made a very good case,	11:55
	gave the arguments on the other side very persuasively.	12:00
	And I agree with a great deal of what he said,	12:04
	and I wanna stress that agreement	12:07
	and then come out to where I disagree	12:10
	and why I come out at a different place than he does.	12:12
	His argument rested basically, I think, on three key points,	12:15
	with two of which I agree and one of which I don't.	12:19
	First, he argued that as people now look ahead	12:22
	for the next year or two,	12:26
	most predictions based on a constant rate of growth	12:29
	of about five percent in M1,	12:32
	most predictions imply a rather slow recovery,	12:35
	a rather slow expansion from here on out,	12:40
	with a relatively high level of unemployment	12:43
	during the next year,	12:46
	perhaps a level of unemployment during 1971,	12:47
	which might average somewhere in the neighborhood	12:51
	of five and a half to six percent	12:54
	and a rather slow tapering off of inflation.	12:58
	He cited a number of different estimates,	13:01
	those of the Federal Reserve Board of St. Louis	13:04
	and its monetary model	13:06
	and those of other models,	13:09
	all of which seem to suggest	13:11
	that over the next year or two,	13:13
	with an M1 of five percent,	13:17
	you would have a rather slow rate of expansion	13:19
	of the economy in real terms,	13:24
	a rather slow tapering off	13:26
	of the rate of price rise,	13:28
	relatively high unemployment.	13:30
	Now, I don't want to argue too much.	13:34
	Let me stop at that point first.	13:37
	On that point, he of course	13:39
	accurately describes what the models predict.	13:42
	I'm not prepared to say they're wrong.	13:46
	It may be that over the next year or two,	13:50
	we will have to,	13:54
	a monetary policy of a far presented rate of growth in M1	13:55
	will mean a rather slow tapering off of inflation	14:00
	and a relatively high level of unemployment.	14:05
	But I have very much less than full confidence	14:09
	that that's the case.	14:12
	I have much more confidence	14:13
	in what it will mean for nominal GNP	14:15
	for income in dollars	14:19
	than I do for the breakdown of that income	14:20
	between prices and output.	14:23
	I do not believe anybody has a satisfactory model,	14:24
	a satisfactory analysis which shows	14:28
	how it will break down between those two.	14:30
	As I have emphasized over and over again,	14:32
	the Federal Reserve Bank of St. Louis model	14:34
	is excellent on the side of nominal GNP.	14:37
	It is very, very much more	14:40
	tentative in terms of the breakdown	14:43
	between prices and output of any increases in nominal GNP.	14:46
	It turns out if you look at the various estimates,	14:52
	they do not disagree so much	14:55
	in respect to what will happen to nominal GNP.	14:57
	Almost all of them come out with a five percent	14:59
	rate of growth in M1 over the next two years,	15:02
	will mean something like a seven or eight percent	15:05
	rate of growth in nominal GNP at an annual rate,	15:07
	much higher between fourth quarter 1970	15:10
	and fourth quarter '71	15:14
	because of the abnormally low level at which we're starting,	15:16
	but on the average over years of something like that.	15:19
	Now, the question is,	15:22
	is it safer to go faster than that?	15:26
	If you go faster than that,	15:29
	are you ever going to be able to get back to a period	15:31
	of relatively low inflation and low unemployment?	15:34
	I am very skeptical that you can.	15:41
	I think unfortunately that we cannot push things farther,	15:43
	faster than they are capable of being pushed.	15:47
	And that's a pretty good compromise,	15:50
	something like seven or eight percent of nominal GNP,	15:52
	it's a pretty good compromise	15:55
	between a policy of really slamming on the break	15:57
	enormously producing very large employment	16:00
	in order to smash inflationary expectations immediately,	16:02
	and a policy of going so slow that you never get anywhere	16:06
	in terms of killing the inflation.	16:09
	Now, if you have such a policy,	16:11
	if you had confidence in such a policy	16:13
	and expectations adapt,	16:15
	then I think it is possible	16:16
	that the actual results would be much more favorable	16:18
	than those that the model suggests	16:20
	and Mr. Samuelson expects	16:23
	or that I myself am willing to say,	16:24
	put at the center of the stage.	16:27
	If you had something like, for example,	16:28
	a seven or eight percent GNP growth in the next year,	16:31
	and if that were combined with a three percent rate	16:35
	of growth in prices, which seems to me not impossible,	16:37
	given that in the fourth quarter of this year,	16:39
	prices are rising at something like	16:42
	the rate of four percent per year,	16:43
	if that came down fast enough	16:45
	so over the next year it averaged three percent,	16:47
	then you would have about a five,	16:49
	room for about a five percent rate of increase in GNP,	16:51
	which would bring you, by the end of 1971,	16:55
	to a lower level of unemployment than you have now.	16:58
	And you would be continuing in that direction.	17:01
	I think that would be fast enough,	17:03
	but maybe I'm wrong.	17:04
	Maybe expectations are so stubborn	17:06
	that in fact prices will rise over the next year	17:09
	at something like four percent,	17:11
	in which case there will be no net reduction	17:13
	in unemployment over that period.	17:16
	So the point I wanna make	17:22
	is that while I do not disagree	17:25
	with the general tenet of those predictions,	17:26
	I think that we have to attach a much larger range of error	17:28
	to the likely outcome	17:32
	that is implied by Mr Samuelson's comment.	17:34
	Now let me turn to the second point.	17:37
	His second point is that it is highly desirable	17:40
	to do better than these predictions suggest,	17:43
	to have a lower level of unemployment,	17:46
	and to do that, even if that means a slower	17:48
	rate of reduction of inflation over the next several years,	17:50
	or even if I judge his tonal quality,	17:54
	that it's desirable to do better	17:59
	even if that means accepting the present rate of inflation	18:01
	as a long run period of inflation.	18:04
	Well, now there's no disagreement on this score.	18:10
	It is highly desirable to do better if we can,	18:12
	it's highly desirable if we could,	18:15
	if there were some magic way	18:17
	by which we could have zero unemployment tomorrow	18:18
	and also zero inflation obviously,	18:21
	everybody would be in agreement.	18:23
	But Mr. Samuelson's point, of course,	18:25
	is not that trivial a point.	18:26
	He recognizes that you cannot do that,	18:28
	and his point is	18:30
	not only that he would prefer	18:34
	but he thinks the people would prefer	18:36
	and he thinks the political environment will demand	18:37
	a more rapid physical recovery than that,	18:42
	and that it will demand that even at the expense	18:47
	of a higher rate of price rise,	18:51
	here I am very much more uncertain,	18:54
	not that it would be desirable	18:58
	but that that is really	19:01
	what the public at large will demand.	19:02
	I think that on the whole,	19:05
	the public attitude depends very much more	19:07
	on whether unemployment is rising or falling	19:10
	than on the level of unemployment.	19:13
	I go back to earlier periods and note	19:15
	that from the period from 1961 to '64,	19:18
	it took four years for unemployment to get down	19:22
	from seven percent down to something about four percent,	19:24
	and for three of those four years,	19:31
	when the general attitude was	19:33
	that the economic conditions were pretty good,	19:34
	unemployment was averaging somewhere in the neighborhood	19:36
	of five percent during all of that period.	19:38
	The important thing was that it was trending down.	19:41
	I think also that there is a great deal of pressure	19:43
	on the side of getting rid of the inflation	19:48
	that this is not something that takes as low a range	19:50
	as is sometimes supposed,	19:56
	as low a priority in people's attitude as sometimes suppose,	19:59
	that there is a great desire	20:03
	on the part of the public at large	20:04
	to get inflation going down,	20:06
	that if they are told the facts that there is no way	20:08
	of slowing inflation,	20:10
	if you try at the same time to engineer a boom	20:12
	that we don't have any magic formula of incomes policy	20:15
	or any other magic formula	20:19
	which would enable us simultaneously	20:21
	to engineer a very rapid boom	20:22
	without restimulating inflation.	20:25
	The important point on this subject is,	20:28
	it seems to me, and this is the third point	20:32
	that Mr. Samuelson makes,	20:35
	he essentially implies that we know how to manage	20:37
	the monetary policy and monetary stock	20:40
	to achieve the objective	20:43
	of a faster reduction of unemployment	20:45
	without a long range rekindling of inflation.	20:47
	And this is a point where I fundamentally disagree with him	20:49
	because on this point, I do not believe we know how	20:52
	to do that.	20:59
	Implicit in his argument is that over a long period,	21:02
	there is a trade-off between inflation and unemployment,	21:05
	that over the next 10 years,	21:08
	it is possible for us	21:10
	to have a lower average level of unemployment	21:13
	at the cost of a higher level of inflation.	21:16
	I do not myself believe that to be the case,	21:20
	and I think our past experience leads us,	21:22
	gives us little reason to expect that it is the case.	21:25
	What you can do is to rearrange the unemployment over time.	21:30
	You undoubtedly could have a lower rate of unemployment	21:34
	over the next year or so	21:37
	by increasing the money stock very rapidly,	21:38
	but if you did, you would stimulate the inflation sharply.	21:40
	In that case, there would arise a great public clamor	21:43
	to do something about the inflation.	21:48
	You would step on the brake again,	21:49
	and you would, once again, go through the kind of episode	21:51
	we've been going through.	21:54
	You would, as it were, be throwing away completely	21:55
	the price we have already paid,	21:57
	as we did, as the Kennedy and Johnson administrations	21:59
	threw away the price that was paid	22:02
	from 1958 to '61 in the form of high unemployment	22:04
	in order to get a stable price pattern.	22:08
	So I do not believe there is any long run trade-off	22:11
	between inflation and unemployment.	22:13
	Now more importantly, I do not believe	22:16
	that we know how to manage the monetary stock	22:18
	in such a sensitive way as to achieve	22:20
	just that delicate balance.	22:23
	There may exist a path,	22:24
	which would lead you if you could do it sensitively enough	22:26
	to a somewhat more rapid amelioration of unemployment	22:30
	without starting an inflation.	22:33
	There may exist a better path	22:34
	than the one we're going to find.	22:36
	The question is if we know how to achieve it.	22:37
	And here, and this is my main point	22:40
	and the main reason why I have been in favor of	22:42
	a constant rate of growth of money,	22:44
	is because the record of history	22:46
	as I look back over the record.	22:48
	Here in the past, I look at what the Fed has done.	22:51
	The Fed has followed exactly the policy	22:55
	that Mr. Samuelson recommends.	22:58
	It has followed a policy	23:00
	of sometimes increasing the money supply more rapidly,	23:02
	sometimes increasing it less rapidly,	23:05
	with the aim of offsetting what it regarded	23:07
	as other forces making for instability.	23:10
	What has been the result?	23:12
	Well, I have examined in detail	23:14
	the record of history over the now nearly 60 years	23:16
	that the Fed has been in operation,	23:21
	and I have also examined the record for other countries	23:23
	and other central banks.	23:25
	I do not know of any example of any bank	23:27
	which has successfully been able to carry out such a policy.	23:30
	Because of the fact	23:33
	that what the monetary authorities do now	23:36
	have their effect six or nine or 12 or 14 months from now,	23:40
	a sensitive discretionary policy requires an ability	23:46
	to forecast a future that does not exist.	23:48
	It requires a confidence in those forecasts	23:50
	that does not exist.	23:52
	It requires an ability to lean against	23:54
	the prevailing winds that does not exist,	23:56
	the prevailing political wind.	24:00
	Mr. William McChesney Martin,	24:02
	when he was chairman of the Fed,	24:05
	was fond of talking about the Fed's policy	24:06
	as leaning against the wind.	24:09
	That's a good image.	24:11
	But if the Fed's policy is going to be successful,	24:12
	it must lean against tomorrow's wind	24:15
	when you don't know which way that wind will be blowing.	24:16
	If you go back and reconstruct the history of the past	24:19
	and take it month by month and year by year	24:22
	and say, let us suppose,	24:24
	we hypothetically in our mind's eye	24:25
	conceive of the Fed as following a policy	24:28
	of a steady rate of monetary growth over that period,	24:30
	would that have been better or worse?	24:33
	And the answer is, it seems to me absolutely clear	24:35
	and would be assented to by Mr. Samuelson	24:38
	in the retrospect of historical examination,	24:41
	the following of a constant rate of monetary growth policy	24:44
	would have avoided every single major mistake	24:48
	of monetary policy.	24:51
	It would have prevented the Great Depression of the 1930s,	24:52
	it would have prevented the depression	24:54
	of the 1937, '38 period,	24:56
	it would more recently have prevented	25:00
	the acceleration of inflation from '64 to '68.	25:03
	And therefore, a policy of	25:08
	a constant rate of monetary growth	25:13
	is not a be all and end all,	25:15
	it is not a perfect policy.	25:16
	What I assert and what I am persuaded by	25:18
	the evidence of history is that it would	25:20
	avoid any major mistakes of monetary management,	25:23
	and on the record of history, there is no evidence	25:26
	that we know how to do better	25:29
	given the political forces at play on the central bank.	25:31
	In general, I have never argued	25:36
	that a constant rate of monetary growth	25:38
	is a be all and end all of all monetary policy.	25:40
	Maybe as our monetary research continues,	25:43
	we will be able to learn enough in greater detail	25:46
	about the interrelationships to construct a formula,	25:50
	a scheme, a guide, a more sensitive scheme or guide	25:55
	that will do still better.	25:59
	What I do say is that in the present state of our knowledge	26:01
	or I should say ignorance,	26:03
	the constant rate of monetary growth	26:06
	will avoid major mistakes,	26:08
	will provide a stable basis for a stable economy,	26:11
	is a policy that can be understood by the public at large,	26:16
	and is a policy that can be followed.	26:19
	Whether we will have the political courage,	26:22
	wisdom, and sense to maintain that policy	26:26
	over the next few years is, of course, a gamble.	26:29
	I am not prepared to set very high rates on it.	26:31
	The evidence of the past is	26:35
	that we do not have that courage.	26:36
	However, the willingness of the Nixon administration	26:39
	to maintain its policy in the face of so much criticism	26:44
	over the past year and a half,	26:47
	the maturity, judgment, and courage of Arthur Burns	26:49
	as chairman of the Federal Reserve Bank	26:54
	and his willingness to maintain a firm policy	26:56
	makes it at least a gambling proposition	26:59
	that we'll be able to stick to this policy,	27:02
	get rid of this inflation once and for all,	27:04
	and go on to a long run policy	27:07
	of stable, non-inflationary growth.	27:09
-	Thank you very much Professor Friedman.	27:12
	Remember subscribers, if you have any questions or comments	27:14
	for topics you would like to hear discussed in this series,	27:17
	please send them to Instructional Dynamics Incorporated,	27:21
	166 East Superior Street, Chicago, Illinois, 60611.	27:24
	Dr. Friedman will be visiting with you again in two weeks.	27:30

Item Info

Title:

Tape 64 - Economic Development, Constructive Money, Growth

Date:

1970

Contributor:

Friedman, Milton, 1912-2006

Subject:

Format:

audiocassettes

Language:

English

Digital Collection:

Paul A. Samuelson papers, 1933-2010 and undated

Source Collection:

Paul A. Samuelson papers, 1933-2010

Series:

Economics Cassette Series: Milton Friedman

Rights:

Limited Re-Use

CC BY-NC 4.0

Rights Note:

This material is made available for research, scholarship, and private study. Copyright in this material has not been transferred to Duke University. For reuses of this material beyond those permitted by fair use or otherwise allowed under the Copyright Act, please see our page on copyright and citations: https://library.duke.edu/rubenstein/research/citations-and-permissions.

Identifier:

RL10082-CS-0256
ref2652_fc8
samuelsonpaul
duke:325278
pstau001255
ark:/87924/r43f4m45n
1ce7c19a-e887-4499-b03c-b3a7730f828a

Permalink:

https://idn.duke.edu/ark:/87924/r43f4m45n

Sponsor:

Sponsor this Digital Collection

Tape 64 - Economic Development, Constructive Money, Growth

Transcript

Item Info

Economists' Papers Archive

More Info & Options