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).
Utopia, you are standing in it! 
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