The latest attempt comes from Neel Kashkari (the new “NK” at the Minnesota Fed, the previous one being Narayana Kocherlakota).
In 1967, Friedman´s “centerfold” for the role of monetary policy was:
“Provide a stable background for the economy”
NK´s “top of the list” role:
“Creating and maintaining a stable monetary environment”
In perfect agreement.
To Friedman, that meant:
keep the machine well oiled, to continue Mill’s analogy. Accomplishing the first task [avoid monetary disorder] will contribute to this objective, but there is more to it than that.
Our economic system will work best when producers and consumers, employers and employees, can proceed with full confidence that the average level of prices will behave in a known way in the future-preferably that it will be highly stable.
Under any conceivable institutional arrangements, and certainly under those that now prevail in the United States, there is only a limited…
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