Re: turn to monetarism query

[William F Hummel <wfhummel@xxxxxxxxx>]

L Randall Wray, in his book "Understanding Modern Money" wrote on
page 101:

"In 1972, the Fed adopted the money multiplier model and briefly
tried to hit reserve targets as a way to allow it to hit M1
targets.  The results foreshadowed those of the 1980s: the Fed
proceeded to miss the reserve targets.    .....

"In October 1979, the new Chairman, Paul Volcker, announced a
major change of policy:  the Fed would use the growth rate of M1
as its intermediate target and would allow the Fed funds rate to
rise as high as necessary to allow achievement of this goal."

William F Hummel

>I'd be interested to see what some others have to say. Greider portrays the
>situation as a decisive shift to monetary tightening with the appointment of
>Volcker. Is this an accurate picture?
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>-----Original Message-----
>From:	STEPHEN BLOCK [mailto:blocks@xxxxxxxxxxxxxxxxxxx]
>Sent:	Fri 6/13/2003 5:54 PM
>To:	Clifford Poirot; pkt@xxxxxxxxxxxxxxxx
>Cc:	
>Subject:	Re: turn to monetarism query
>Thanks Clifford. I've read that book. But I cannot entirely agree. Volcker,
>from what I recall, for example, was Kissinger's idea. Aside from that, the
>elimination of wage and price controls policy in favour of monetary
>tightening it seems to me was the real beginning of it all, albeit the
>precursor to what you have mentioned. But thanks again and perhaps others
>would see it your way.
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>Stephen
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>I do not think Nixon turned to monetarism. Read Bill Greider's "Secrets of
>the Temple" for an account of the turn to monetarism in the US. He says it
>came later in 1978 under Carter with the appointment of Volcker.
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>-----Original Message-----
>From: STEPHEN BLOCK [mailto:blocks@xxxxxxxxxxxxxxxxxxx]
>Sent: Wednesday, June 11, 2003 8:08 AM
>To: pkt@xxxxxxxxxxxxxxxx
>Subject: Re: turn to monetarism query
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>In the early 70's, Nixon turned away from wage and price control in favour
>of monetary solutions (to combat inflation). Can anyone cite any good
>accounts of this? It can be within the broader context of the turn to
>monetarism in the US and the UK, but my interest is on Nixon's doing this,
>the possible motivations behind it and the effects these changes had on the
>direction of economic policy. Obviously this is a large subject, but my
>interest is really on the kinds of debates around this turn around that
>time. But any other suggestions would be appreciated.
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>Thanks
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>Stephen
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