Word: money
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Dates: during 1960-1969
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Inflationary Engine. "Over the past years, the Federal Reserve has been an engine of inflation," complains Friedman. "Inflation is always and everywhere a monetary phenomenon, produced in the first instance by an unduly rapid growth in the quantity of money. I've sat in many a meeting with the Fed and argued with them. Three or four times I thought they had got the message, but every time they've strayed off the track...
...that reason, he believes that the fiercely independent Federal Reserve should be stripped of most of its powers to manipulate money. As he sees it, the board's seven governors-who now serve for 14 years-should have terms coinciding with that of the President who appoints them. Nixon recently went out of his way to ask Board Chairman William McChesney Martin to stay on, even though Friedman argues that the board under Martin has been wrong too often. Friedman now hopes that the chairman will retire before his term expires on Jan. 31, 1970. By law, Martin cannot...
Friedman's main point is that the Reserve Board should simply let the money supply grow at a constant rate of about 5% a year, in line with the real growth of the nation's output of goods and services. An increasing number of experts agree with him. Last summer the congressional Joint Economic Committee urged the Federal Reserve to expand the money supply no less than 2% and no more than 6% a year. Last week 40 out of 71 economists who responded to a survey by a House subcommittee urged the Reserve Board to increase...
...sense, Friedman is like a Paris designer whose haute couture is bought by a select few, but who nonetheless influences almost all popular fashions. Richard Nixon's economists will not accept all of Milton Friedman's money-supply theory. They will, however, pay much more attention to monetary policy -and relatively less to taxes and Government spending. In that way, they hope to ease the economy onto a steadier, less inflationary course...
...been demonstrated lately by the stock market. Brokers normally count on a year-end rally, and they have been disappointed only six times in the past 41 years. Last week was one of those times. Mostly because of the Federal Reserve Board's recent moves to make money scarcer and costlier to borrow, the latest slump in stock prices stretched out to a full month...