Comments on: Central bankers have abandoned Milton Friedman http://blogs.reuters.com/nicholas-wapshott/2012/12/17/central-bankers-have-abandoned-milton-friedman/ Wed, 26 Nov 2014 19:47:54 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: keebo http://blogs.reuters.com/nicholas-wapshott/2012/12/17/central-bankers-have-abandoned-milton-friedman/#comment-204 Wed, 19 Dec 2012 18:01:39 +0000 http://blogs.reuters.com/nicholas-wapshott/?p=112#comment-204 The central banks pretend to deal with economic reality when they are actually uninformed as to what the result of their tinkering and central planning will do. If you doubt this think of how they contributed massively to the effort that got us into the current situation. They claim to be competent but they are only playing theoretical and egotistical games with people’s lives. Remove the dual mandate – the central banks have proven their stupidity in the real economy and need to stick to stabilizing the currency.

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By: gordo53 http://blogs.reuters.com/nicholas-wapshott/2012/12/17/central-bankers-have-abandoned-milton-friedman/#comment-202 Wed, 19 Dec 2012 15:24:55 +0000 http://blogs.reuters.com/nicholas-wapshott/?p=112#comment-202 What is very different now is that the US and much of the developed world are in a long, protracted economic downturn. We are currently in a severe recession and have been since 2007. The only reason we have positive gdp is that the government is deficit spending at a rate orders of magnitude greater than our “growth”. Our economy is in what is best described as uncharted waters. No doubt there are very difficult times ahead. Precisely what will happen and when are questions that no economic theory or gaggle of economic experts can answer.

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By: vb2b http://blogs.reuters.com/nicholas-wapshott/2012/12/17/central-bankers-have-abandoned-milton-friedman/#comment-200 Wed, 19 Dec 2012 10:54:52 +0000 http://blogs.reuters.com/nicholas-wapshott/?p=112#comment-200 This post is wrong in asserting that Margaret Thatcher introduced inflation targeting in the UK. It was her successor, John Major, who first put in place an inflation target in late 1992 following Black Wednesday. The initial range was 1-4%, not 2%. Between 1979 and 1990, the Thatcher government targeted first monetary aggregates and then the pound’s exchange rate, initially by shadowing the Deutschemark under Nigel Lawson and eventually by formally joining the ERM in October 1990. As Chancellor, Nigel Lawson gave consideration to a nominal GDP objective, as apparently envisaged by Carney, but rejected the option mainly for technical reasons such as the lag in the calculation of GDP figures.
More broadly, setting Keynes and Friedman as mutual exclusives is absurd. Both advanced economic knowledge and developed insights and policy tools useful in different economic circumstances.

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By: From_California http://blogs.reuters.com/nicholas-wapshott/2012/12/17/central-bankers-have-abandoned-milton-friedman/#comment-199 Wed, 19 Dec 2012 00:11:24 +0000 http://blogs.reuters.com/nicholas-wapshott/?p=112#comment-199 The way that Milton Freidman was treated as some kind of scientist who’d made an E=mc2 discovery was one reason thinking people started being skeptical about economics as an objective science, as opposed to an intellectual front for politicians and business interests. We have a flood of money out there, and a huge federal deficit — but little inflation. I’m not saying times are good. They are terrible. But there are many factors governing inflation, not just the money supply — especially in a global economy. MF’s dictum was a sop for simple minds who wanted a slogan they could grasp. Too bad the real world is so complex.

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By: Matt-Chicago http://blogs.reuters.com/nicholas-wapshott/2012/12/17/central-bankers-have-abandoned-milton-friedman/#comment-198 Tue, 18 Dec 2012 15:52:57 +0000 http://blogs.reuters.com/nicholas-wapshott/?p=112#comment-198 “Americans cannot hope to recover the prosperity they enjoyed before 2008 unless and until everyone is back to work. So long as there is a large reservoir of jobless, public spending on welfare must remain high.”

True. Americans also cannot hope to return to work until their skills align with the market’s demand. Automation has caused so many individuals to be obsolete in the current economy. Until we can be re-trained, or the people that can’t adapt die off, this will probably be the case. I think it’s an inevitable transition period for the world.

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By: usagadfly http://blogs.reuters.com/nicholas-wapshott/2012/12/17/central-bankers-have-abandoned-milton-friedman/#comment-197 Tue, 18 Dec 2012 00:10:21 +0000 http://blogs.reuters.com/nicholas-wapshott/?p=112#comment-197 A very major change in the picture is the constant re-definition of the term “unemployment” to cast a rosy glow on the complexions of our current politicians. Over time, the term has become divorced from actual work among the population.

If the same definitions which applied in the early 1930’s were applied today, unemployment would be closer to 20% than to 10%. This means the impact on the society is becoming severe enough to endanger social stability. So, using our gerrymandered definitions of “unemployment”, silly sounding policies are promoted. But they are not silly if you use definitions intended to correspond with social, rather than political, reality.

We live in Orwell’s world of “newspeak”. It is not intended to make sense. It is intended to manipulate.

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By: stevedebi http://blogs.reuters.com/nicholas-wapshott/2012/12/17/central-bankers-have-abandoned-milton-friedman/#comment-196 Mon, 17 Dec 2012 22:31:07 +0000 http://blogs.reuters.com/nicholas-wapshott/?p=112#comment-196 It will not make any difference. Unless a President believes in American capitalism, the economy cannot recover, try as it will. The current administration promotes policies of division and “spreading the wealth” (including vast spending mandates on Obamacare) that will keep the economy from recovery. We are in for a rough few years.

For those who point to the Clinton years (as the author does), government spending was 19% of GDP during those years. Today it is around 24%. Growing government does not provide employment; it just causes more bloated bureaucracy.

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By: matthewslyman http://blogs.reuters.com/nicholas-wapshott/2012/12/17/central-bankers-have-abandoned-milton-friedman/#comment-195 Mon, 17 Dec 2012 20:46:01 +0000 http://blogs.reuters.com/nicholas-wapshott/?p=112#comment-195 Thank you.

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By: MoBioph http://blogs.reuters.com/nicholas-wapshott/2012/12/17/central-bankers-have-abandoned-milton-friedman/#comment-194 Mon, 17 Dec 2012 20:20:43 +0000 http://blogs.reuters.com/nicholas-wapshott/?p=112#comment-194 “Friedman’s belief that inflation “is always and everywhere a monetary phenomenon” [and] could be cured by the Fed rationing the supply of money” ignored the velocity of that money supply. As distinct from money, I think of currency as the amount of money that circulates per unit of time. The renewed attention to economic growth and employment expands the focus from money alone, so that attention is again paid to currency. Hallelujah.

Defining the amount of money as the measure of its mass, and the rate at which money circulates as the measure of its velocity, the amount of money times its rate of circulation would be the monetary equivalent of momentum. I would like to know whether a frame of reference can be found in which that monetary momentum is conserved. To test that, we could use a few economic Einsteins.

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By: ptiffany http://blogs.reuters.com/nicholas-wapshott/2012/12/17/central-bankers-have-abandoned-milton-friedman/#comment-193 Mon, 17 Dec 2012 20:18:20 +0000 http://blogs.reuters.com/nicholas-wapshott/?p=112#comment-193 Because the Federal Reserve has added another criteria or target does not mean that the primary concern of moderating inflation is no longer a primary issue. During this time of global recession when the dollar as the world’s reserve currency is still supreme, inflation is of little concern, so secondary concerns appropriately come into play.

Friedman and Krugman still reign supreme.

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