Word: friedman
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Dates: during 1970-1979
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Christmas Every Month. Laffer's most important indicator is the rate at which the Federal Reserve expands the nation's money supply. That is also Milton Friedman's central idea, but Laffer gives it a special twist: he believes that an increase in money supply gives the economy an "instantaneous and permanent" boost. His reasoning is that businessmen and consumers will immediately spend every cent they get their hands on, and that new money moves speedily into their pockets. "People want to see the color of the money," he says. "When they see it, they jump quick...
...conservatives often lament the welfare mess in the harshest terms, they have offered few realistic and workable alternatives. Senator Barry Goldwater, in The Conscience of a Conservative, advocates turning all welfare over to private institutions?an 18th century solution for a 20th century problem. His onetime adviser, Economist Milton Friedman, and the Senate's newest prominent conservative, James Buckley of New York, both favor a modern concept, the negative income tax. But Friedman shackles the idea to what he calls, without being specific, a "modest" level of aid. Under the NIT, the tax scales would be continued downward past...
Test of Nerve. It is still too soon to assess whether monetary policy has proved inadequate in curbing inflation or reviving the economy. "We have come out of this very luckily," Friedman contends. "But we aren't through yet. The test is whether the Administration and the Federal Reserve will have the guts to keep the present relatively moderate expansion policy and let inflation taper down. There is a real danger of increasing the money supply at such a rate as to rekindle inflation...
...great debate will probably lead policymakers to use an eclectic blend of Keynesian fiscal principles and Friedman monetary principles. Stanford's George L. Bach, one of the most eminent neutral economists, argues that neither fiscal nor monetary policy alone "is powerful enough to regulate the economy effectively. If the Government is sensible, it will always use both." As a decade of prosperity, inflation and recession has demonstrated, changes in taxes and Government spending are difficult to arrange but quick to act on the economy. By contrast, money policies can be changed overnight, but their effect is long delayed...
...Economists have long realized that monetary restraint affects output first, prices later. Friedman for the first time articulated the typical length of the second lag last September during a speech in London. The effect is to double the delay between dosage and result that has been popularly attributed, to monetarist medicine...