Ask not what your monetary policy can do for you, but what you can do for your monetary policy. That’s the jist of a 1968 paper by Milton Friedman, the poster-child for monetarist economics, entitled “The Role of Monetary Policy,” whose key questions remain hotly debated more than four decades on. Friedman’s answer is simple (some might argue too simple), and all too familiar to those who read the speeches of present-day Federal Reserve hawks – focus on the only thing monetary policy can truly control, which in Frideman’s view is price stability.
Followers of the dismal science will note the passing of Sir Alan Walters on January 3. Walters was the controversial economist who advised Margaret Thatcher during what turned out — regardless of whether seen as good or bad — to be a revolution in matters both monetary and social.