Word: friedman
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...Milton Friedman's opinions have particular weight now because the Nixon Administration has placed great reliance on the policies that he prescribes to deal with the current inflation. Friedman was one of Richard Nixon's chief economic advisers during the election campaign. He did not seek a full-time job in Washington because "I like to be an independent operator," but his ideas are highly regarded within the Administration. "Milton Friedman has influenced my thinking," says Paul McCracken, chairman of Nixon's Council of Economic Advisers, who describes himself as "Friedmanesque." The two men often talk on the telephone, chat...
...Friedman's monetarist view of economics, the chief instrument for controlling movements of the economy is the seven-man Federal Reserve Board. For months, the board has been following a tight-money policy of unusual severity. A year ago, it began to hold back the growth of the money supply; since midyear, it has permitted no growth at all. Ironically, Friedman's principal complaint is that the Federal Reserve is overdoing the restraints in its effort to cure inflation. "If the board continues to keep the growth of money at zero for another two months, I find it hard...
Maisel and George W. Mitchell, both economists, side with Friedman in contending that the Federal Reserve has kept money scarce for so long
...that it has created a severe risk of recession. Though neither embraces Friedman's whole concept, they maintain that the board should pay less attention to fluctuations in the money market and more to fundamental trends. They also have been arguing since last August that unless the money managers act promptly, they will eventually have to release so much money to prop a slumping economy that inflation will begin again...
...Friedman sees it, the timing and severity of a recession will depend mainly upon how quickly Maisel and Mitchell can persuade their fellow board members to ease up on money. President Nixon can cajole the members, but legally he cannot control the actions of the board, which is independent of the executive branch. As a practical matter, though, the board would find it difficult to resist presidential arm-twisting...