Re: turn to monetarism query-reply to clifford

["Niggle, Christopher" <Christopher_Niggle@xxxxxxxxxxxx>]

 Cliff, others interested:  Well monetarism is a fuzzy term for
sure,interpreted in many ways.  But to the extent that it means (1)
targetting monetary aggregate growth rates, and especially narrow aggregates
like M1, while (2) ignoring what happens to interest rates as a policy
stance, with (3) the understanding that controlling M1's growth is the best
way to reduce inflation, Greider's account is pretty spot on.  The Fed had
earlier flirted with monetarism in the sense of trying to control monetary
aggregates by controlling reserves in the early 1970s, but they were still
paying attention to short term interest rates as well, as I recall. The late
'79-'81 monetarist experiment can be interpreted as a decisive move toward
monetarism in that sense.

The context for the Fed move under Volcker was the growing influence of
monetarists w/n academia and central bankers beginning in the early 1970s;
which in turn was greatly strengthened by the stagflation of the 70s.

Chris

-----Original Message-----
From: Clifford Poirot
To: STEPHEN BLOCK; Clifford Poirot; pkt@xxxxxxxxxxxxxxxx
Sent: 6/13/03 7:49 PM
Subject: Re: turn to monetarism query
Importance: Low

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?


-----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.

Stephen








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.


-----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





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.

Thanks

Stephen