What influence did Milton Friedman have on 1980s and 1990s Australian monetary policy?

The Hayek and Friedman Monday conferences on the ABC in 1976 and 1975 are still ruling the Australian policy roost, if some of the Left over Left in Australia are to be believed. Milton Friedman is said to have mesmerised several countries with a flying visit with his Svengali powers of persuasion.

When working at the next desk to a monetary policy section in the Australian Prime Minister’s Department in the late 1980s, I heard not a word of Friedman’s Svengali influence:

• The market determined interest rates, not the Reserve Bank was the mantra for several years. Joan Robinson would have been proud that her 1975 Monday conference was still holding the reins.

• Monetary policy was targeting the current account. Read Edwards’ biography of Keating and his extracts from very Keynesian Treasury briefings to Keating signed by David Morgan that reminded me of Keynesian macro101.

When as a commentator on a Treasury seminar paper in 1986, Peter Boxhall – fresh from the US and 1970s Chicago educated – suggested using monetary policy to reduce the inflation rate quickly to zero, David Morgan and Chris Higgins almost fell off their chairs. They had never heard of such radical ideas.

In their breathless protestations, neither were sufficiently in-tune with their Keynesian educations to remember the role of sticky wages or even the need for the monetary growth reductions to be gradual and, more importantly, credible as per Milton Freidman and as per Tom Sargent’s end of 4 big and two moderate inflations papers in the early 1980s.

I was far too junior to point to this gap in their analytical memories about the role of sticky wages, and I was having far too much fun watching the intellectual cream of Treasury senior management in full flight. (I read Friedman & Sargent much later).

3 Comments (+add yours?)

  1. nottrampis
    Jan 29, 2015 @ 08:31:44

    Friedman lost influence because ironically controlling money supply became meaningless when you deregulated the monetary system. Setting a target for m3 was meaningless
    Hayek never had any influence at all thank the lord. Boxall was a prophet and it showed in Costello’s last budgets.(sarc)

    Liked by 1 person

    Reply

  2. nottrampis
    Jan 29, 2015 @ 12:48:16

    Oh and this is in Around the Traps tomorrow.

    I always thought Barry Hughes gave Friedman some great questions on Monday conference.

    Liked by 1 person

    Reply

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

JoNova

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Peter Winsley

Economics, and such stuff as dreams are made on

A Venerable Puzzle

"The British constitution has always been puzzling, and always will be." --Queen Elizabeth II

Real Time with Bill Maher Blog

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Climate Audit

by Steve McIntyre

New Historical Express

(Formerly Hatful of History)

Science Matters

Reading between the lines, and underneath the hype.

Uneasy Money

Commentary on monetary policy in the spirit of R. G. Hawtrey

The Market Monetarist

Markets Matter, Money Matters...

Truth on the Market

Scholarly commentary on law, economics, and more

Organizations and Markets

Economics of organizations, strategy, entrepreneurship, innovation, and more

John Quiggin

Commentary on Australian and world events from a socialist and democratic viewpoint

The Antiplanner

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Pedestrian Observations

For Walkability and Good Transit, and Against Boondoggles and Pollution

Bet On It

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Trade Diversion

Commentary on development, globalization, and trade by Jonathan Dingel.

Movie Nation

Roger Moore's film criticism, against the grain since 1984.

Weapons and Warfare

History and Hardware of Warfare

fportier.wordpress.com/

Franck Portier's professional page

NZCPR Site

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Anti-Dismal

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Bowalley Road

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

History of Sorts

WORLD WAR II, EIGHTIES, MUSIC, HISTORY, HOLOCAUST

Tudor Chronicles

News, reviews and talk all about the Tudors

Karl du Fresne

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Great Books Guy

Reading The Classics

@STILLTish. Gender Abolition

Examining Gender Identity ideology and its impact on Women's Sex based rights and Gay Rights. Exploring how this has taken such firm root in Western societies (Cognitive & Regulatory Capture).

200-Proof Liberals

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

What Paul Gregory is Writing About

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Offsetting Behaviour

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

JONATHAN TURLEY

Res ipsa loquitur - The thing itself speaks

Conversable Economist

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Barrie Saunders

Thoughts on public policy and the media

The Victorian Commons

Researching the House of Commons, 1832-1868

Coyote Blog

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

The History of Parliament

Blogging on parliament, politics and people, from the History of Parliament

Books & Boots

reflections on books and art

Legal History Miscellany

Posts on the History of Law, Crime, and Justice

Sex, Drugs and Economics

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

%d bloggers like this: